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LAM12150 | International and cross border: CFC provisions in practice

From HM Revenue & Customs · Life Assurance Manual

In order to ensure that the CFC rules have been complied with, life insurers will need to have a process to ensure the portfolio is reviewed for compliance.

In practice, this means that for companies writing BLAGAB:

  • equity funds which meet the control provisions in SI2012/3044/Regulation 3 need to be tested to evidence that they meet the tests in Regulation 4 -LAM12130

  • bond funds are identified and excluded where the conditions in TIOPA10/S371BG(7) are met

  • other funds which are CFCs need to be reviewed to identify any where the return is not excluded by the provisions of TIOPA10/S371BH

The ability to include the investment return in FA12/S73 step 2 means that in practice, an actual CFC charge is less likely to arise, with all the complications of the potential double taxation.