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HMRC internal manual

Life Assurance Manual

Apportionment rules: Disaggregating trade profits and losses: FA12/S98

The allocation of a company’s overall trade profit (or loss) between BLAGAB and other long-term business may result in a trade profit from BLAGAB and a trade loss from other long-term business (or vice versa). This reflects the reality that two trades could produce very different results, and therefore the allocation method could produce an allowable loss for one business and taxable profit for the other.

This is not the case for commercial allocation of income. FA12/S98 refers to a method of deciding how much of the credits or other income and the debits or other losses arising from the company’s long-term business are referable to BLAGAB. When allocating a single category of income, loss or expense between BLAGAB and non-BLAGAB under S98, then the allocation of a specific item should not be capable of resulting in one positive and one negative figure.