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HMRC internal manual

General Insurance Manual

Equalisation reserves: the tax rules: group regulatory returns

Groups of general insurance companies sometimes take advantage of the modification and waiver power available to the Financial Services Authority under section 148 of the Financial Services and Markets Act 2000. In such cases, the FSA makes a ‘direction’ that rewrites some of the reporting paragraphs of its sourcebook IPRU(INS), notably IPRU(INS) 9.3(1). The effect of this is to refocus the reporting requirements onto a consolidated basis. In such a case, it will be for the company and its auditors to determine the equalisation reserve for each individual company.

The arrangement under which groups of insurance companies were also able to enter into an arrangement under which they prepared a single tax computation for the group in respect of non-life business was withdrawn in relation to accounting periods beginning on or after 1 January 2000.