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HMRC internal manual

General Insurance Manual

Equalisation Reserves: International Accounting Standards (IAS)

Under International Accounting Standards (IAS), which apply to the financial statements of some insurers from 2005 (see GIM2070), there is no requirement to treat equalisation provisions as liabilities in the financial statements. However, the Financial Services Authority continues to treat them as liabilities for the purposes of demonstrating compliance with an insurer’s capital requirements under the Insurance Accounts Directive.

FA98/S42 permits departures from generally accepted accounting practice in computing trading profits, and ICTA88/S444BA is such a departure.

Transfers to and from equalisation reserves continue to admissible/taxable in accordance with the rules in GIM7000+.