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HMRC internal manual

Insurance Policyholder Taxation Manual

Ability to select property: broker bonds and investment advisers: circumstances where policy may be a PPB

Exceptionally, a policy may be a PPB even where there is a broker or investment adviserinvolved. The arrangements between the insurer and the adviser or broker, or between theadviser or broker and the policyholder, or in the case of a tripartite agreement among allthree of them, could prove material.

The investment objectives of the policyholder in accordance with which the adviser orbroker has to act may be so restricted that it is effectively the policyholder that isselecting the property held in the policy. In this case, the adviser or broker is no morethan a conduit or agent through whom the policyholder gives the insurer its instructions.These may be instructions as to what new investments may be selected and, with acontinuing policy, the scope and freedom for replacing investments by other investments.

The terms of the legislation cannot be avoided simply by interposing an investment adviseror broker between the policyholder and the insurer. An insurer may, however, not be awareof an arrangement between a policyholder and an investment adviser or broker. It is notthe responsibility of the insurer, when deciding whether a particular policy is a PPB, toreview anything other than the contracts to which it is a party.

Further reference and feedback IPTM1013