Captive insurers: controlled foreign companies (CFCs): funded accounting: special tax rules
Under normal CTSA rules, amendments to a company tax return can be made within 12 months following the filing date. Where funded accounting is used by a company required to make a CTSA return, then by virtue of FA98/SCH18/PARA85 the amendment may be made within twelve months following the replacement of the technical provision. The date the technical provision is replaced is the date the accounts are signed off (see GIM4160). A new CTSA enquiry window is opened in such cases and extends to two years from the date the technical provision is replaced.
Section 755B ICTA88
The special rules for CFCs carrying on general insurance business are set out in ICTA88/S755B. These mirror the provisions of FA98/SCH18/PARA85 in relation to the return of a UK company which has a relevant interest in a CFC. The UK company’s return must be amended within two years following the end of the replacement of the technical provision in the CFC’s accounts. As with UK insurers using funded accounting, this means the date the accounts are signed off.
The Non-resident Companies (General Insurance Business) Regulations (SI1999/1408)
The Non-resident Companies (General Insurance Business) Regulations (SI1999/1408) added further rules with effect from 10 June 1999. These regulations modify Chapter 4 Part 17 ICTA88 in relation to captives using funded accounting and insert a number of new provisions into that Chapter:
- a new section 754AA, which applies to situations where it is not yet established that the non-resident is a CFC - (SI1999/1408 Regulation 4) (GIM11120)
- a new subsection (4A) in section 755B (SI1999/1408 Regulation 5) (GIM11100)
- a modified paragraph 2 Schedule 25 in ICTA 1988 (SI1999/1408 Regulation 6) (GIM11100).