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The Insurance Companies (Taxation of Reinsurance Business) Regulations 1995

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Calculation of investment return in second and subsequent accounting periods other than final accounting period

5.—(1) Where the period during which a reinsurance arrangement is in force falls within more than one accounting period, the amount of the investment return in the second or any subsequent accounting period other than the final accounting period (“In”) shall be calculated in accordance with the formula—

where—

  • PÅnÉ is the aggregate of the sums paid by the cedant company to the reinsurer during that accounting period and earlier accounting periods by way of premium or otherwise;

  • CÅnÉ is the aggregate of the sums paid by the reinsurer to the cedant company during that accounting period and earlier accounting periods by way of commission or as a result of the surrender in part of the rights under the policy or otherwise;

  • IÅn − 1É is the aggregate amount of the net investment return in previous accounting periods, that is to say, net of tax at the rate prescribed by paragraph (2) below; and

  • R is the percentage rate of return prescribed by regulation 7(4) or (6), as the case may be;

but where the result is less than zero, taking the amount to be zero.

(2) The rate prescribed by this paragraph is the rate applicable in accordance with section 88(1) of the Finance Act 1989(1).

(1)

Section 88(1) was amended by section 45(1) of the Finance Act 1990.

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