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LAM04200 | Calculating ‘E’ adjusted BLAGAB management expenses: Step 3: Calculate the amount of any deemed management expenses: FA12/S78(3)

From HM Revenue & Customs · Life Assurance Manual

Deemed management expenses for the purposes of calculating E are listed at FA12/S78(3) and include:

  • spread acquisition expenses (see LAM04100-4120) FA2012/S79.

  • general annuity business (see LAM04210) FA12/S83.

  • a net loss arising from property business referable to the company’s BLAGAB business FA12/S87(3) (LAM03080).

  • excess debits in respect of intangible fixed assets (FA12/S88(6)) LAM03060.
    Where intangible fixed assets debits exceed credits there is an excess debit. For accounting periods beginning on or after 15th September 2016 the excess debit is treated as a deemed management expense for that period. Prior to this the excess debit was carried forward and treated as a deemed BLAGAB management expense of the next accounting period.

  • excess miscellaneous losses (FA12/S89(2)) D. Miscellaneous losses, after set off against miscellaneous income of the accounting period, are carried forward and treated as a deemed BLAGAB management expense of the next accounting period.

  • transitional relief for old general annuity contracts (FA91/SCH7/16(1)).
    General annuity business treatment was changed in 1992 and hence consideration of brought forward balances in the few cases where these may still exist is all that is required. Transitional relief is provided by FA91/SCH7/PARA16(1) as a deemed BLAGAB management expense.

  • plant and machinery allowances in respect of management assets (CAA01/S256(2)(a)). Any plant and machinery allowances in respect of BLAGAB business are treated as deemed BLAGAB management expenses for the accounting period.

  • loan relationship deficit carried forward from previous APs (CTA09/S391(3) LAM03060. Any unused loan relationship deficit is carried forward to the next accounting period and treated as a deemed BLAGAB management expense.

  • remediation relief for contaminated or derelict land (CTA09/S1162) see LAM04030.

  • manufactured dividends (CTA10/S814C(7)). Where a manufactured dividend referable to BLAGAB is paid by the company and it has received the real dividend as a property income distribution from a UK REIT, taxable by virtue of CTA10/S548(5), then the payment is a deemed BLAGAB management expense (the rules were slightly different pre 1/1/2014)