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HMRC internal manual

General Insurance Manual

Captive general insurers: equalisation reserves

SI1999/1408 Regulation 7 ensures that the Equalisation Reserves Rules (see GIM7290) are deductible in computing distributable profits for captive insurers, provided the reserves are maintained in the same way as is required for UK companies or branches. But a CFC cannot obtain a deduction for an equalisation reserve where it leaves the fund open beyond the end of the third year following the replacement of the technical provision. Captive insurers using funded accounting are thus in the same position as UK companies or branches. INTM213080 gives more details.