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HMRC internal manual

General Insurance Manual

Non-resident insurers: other taxation issues: loan relationships and derivative contracts

GIM5090+ describes the effect of Chapter 2 Part 4 FA 1996 on general insurers. GIM5100 says that companies must use the accounting method shown in the Companies Act accounts, and not the regulatory return. For non-resident companies this includes companies that produce accounts in accordance with regulations made under section 1050(3) of the Companies Act 2006 (those companies where the Home State does not require audit and disclosure of accounts itself). Companies who file their Home State accounts must use those Home State accounts as the basis for the Chapter 2 Part 4 FA 1996 amounts.

For periods beginning on or after 1 October 2002, companies whose Home State accounting practice does not permit the use of mark-to-market where UK GAAP would permit such a method may elect that mark-to-market shall be used for the loan relationships and derivative contracts concerned. See CFM5142+ (loan relationships) and CFM13536+ (derivative contracts).