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HMRC internal manual

General Insurance Manual

Equalisation reserves: the tax rules: insurers not regulated in the UK: controlled foreign companies

Regulations 8A and 8B apply regulation 8 to controlled foreign companies (CFCs) - see GIM11160. A captive insurance company therefore obtains the benefit of an equalisation reserve deduction if it maintains an equalisation reserve which is ‘equivalent’ to a reserve maintained under the equalisation reserves rules. Again, the special rules which apply to credit insurance business (GIM7120), mutual business (GIM7260), non-annual accounts (GIM7220) and waiver of equalisation reserves deductions (GIM7250) all apply to equivalent reserves maintained by captive insurance companies.