Lam03500 - calculation of ‘i’ income and chargeable gains: fa12/s73 step 3: calculate deemed ‘i-e’ receipts fa12/s92 - hmrc internal manual

LAM03500 - CALCULATION OF ‘I’ INCOME AND CHARGEABLE GAINS: FA12/S73 STEP 3: CALCULATE DEEMED ‘I-E’ RECEIPTS FA12/S92 Certain BLAGAB trading receipts count as deemed I-E receipts and must be

included in step 3 of the I-E profit calculation. These are receipts that are taken into account in calculating a BLAGAB trade profit or loss, but are not brought into the charge to

corporation tax elsewhere and are not ‘excluded receipts’. The following are excluded receipts: * premiums * sums received under reinsurance contracts where substantially all of the

insurance risks relating to the contracts are reinsured * sums received under reinsurance contracts unless they are reinsurance commissions, or sums calculated by reference to the ordinary

BLAGAB management expenses (as defined by FA12/S77) and are not already excluded by bullet 2 above * sums which do not fall within the charge to corporation tax because of an exemption (e.g.

non-taxable distributions) * payments received under the Financial Services Compensation Scheme * payments received from other insurance companies to enable the company to meet its

obligations to policyholders Examples of deemed I-E receipts, i.e. items that fall to be taxed under this rule, include reinsurance commissions, contributions to expenses, underwriting

commissions and unit trust rebates. A research and development expenditure credit is treated as a deemed I-E receipt under CTA09/104V(3). This is also the case for mutuals and friendly

societies. The appropriate amount of receipts to be included at step 3 of the I-E basis calculation is calculated by deducting expenses from the receipts so far as is necessary to calculate

the full amount of the profits. Previous page Next page Print this page