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HMRC internal manual

General Insurance Manual

Mutual insurance: tax treatment: accounting periods beginning before 1 October 2002: loan relationships: exchange gains & losses: financial instruments

For mutual general assurance business reflected in accounting periods ending before 1 October 2002

  • the treatment of loan relationships was governed by Chapter 2 Part 4 FA1996 and FA96/S103 (3) provided that the mutual activities were not to be treated as a trade or part of a trade (so that non-trading relationships applied)
  • assets or liabilities were treated by Chapter 2 Part 2 FA1993 as being held in ‘exempt circumstances’ such that exchange gains and losses on monetary assets and liabilities were reduced to nil
  • profits or losses on financial contracts were treated as giving rise to non-trading credits and debits (FA94/SCH18/PARA3).

Further detail may be found in earlier versions of GIM, paragraphs 9060 to 9080. These are available from the Editor.