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HMRC internal manual

General Insurance Manual

Taxation of the investment return: investment gains: accounting periods beginning on or after 1 January 2002: transition from realisation basis: transfers of business

FA02/S64 to FA02/S66 and FA02/SCH22 are relieving provisions and continue to be available where there is a transfer of general insurance business under Part 7 FSMA 2000 (see GIM4220), or a similar transfer authorised in another EU or EEA member state (FA02/SCH22/PARA10).

Where an election has been made under section FA02/S66 to continue the realisation basis for assets acquired before 2002, the assets retain that status if they are transferred to another company in accordance with a Part 7 (or equivalent overseas) insurance business transfer scheme.

In these cases assets are not treated as having been realised by the transferor, and the transferee is required to bring any amounts deferred under FA02/SCH22/PARA8 and 9 into account. For this purpose the transferee must be within the charge to corporation tax in respect of the assets, namely be UK resident or trading in the UK through a permanent establishment in circumstances such that the assets transferred are attributable to it (see GIM10000+).