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HMRC internal manual

General Insurance Manual

Captive insurers: controlled foreign companies (CFCs): funded accounting: mixed business

A CFC may carry on some business for which it accounts annually and other business for which it accounts on a funded basis. It has 18 months from the date of the replacement of the technical provision in respect of the funded business to make an acceptable distribution, as is the case for a company which accounts wholly on funded basis.

The accounts of a company with mixed business may recognise a loss in its funded business before the closure of the fund. Occasionally the computations might reflect the net position of the annual and funded business. This would be an anticipation of the loss in the funded business. The correct position is that the computation of the profit or loss of the funded business should be undertaken when the fund closes and not before.

The acceptable distribution policy rules were repealed by FA09/SCH16 Part 1 for accounting periods beginning on or after 1 July 2009.