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HMRC internal manual

General Insurance Manual

Reinsurance and other forms of risk transfer: financial reinsurance and alternative risk transfer (ART): insurance linked securities: other rules

Chargeable gains

Sections 171 and 171A TCGA 1992 ensure that assets can generally be transferred between companies within the same group without any immediate chargeable gain consequences. This recognises that business activities carried on within the overall economic ownership of a corporate group, within the charge to corporation tax, should, in broad terms, be tax neutral.  These sections do not apply if the company receiving the asset is a QTV.  This ensures that should a QTV be part of a group of companies, assets cannot be transferred to it and then disposed of with no corporation tax being payable.

Loss relief and group relief

The core and cell of each protected cell company are treated as separate companies for the purposes of loss relief and group relief and not treated as a member of any group or consortium.

As QTVs are given exemption from corporation tax on profits arising from the activity of insurance risk transformation so the use of losses is restricted.  Losses can only be relieved by being carried forward against any profits chargeable to corporation tax of the same company or cell.