TaxAdministrationLife insurers face avoidance clampdown

Life insurers face avoidance clampdown

An Inland Revenue crackdown on tax avoidance by life insurance companies has been signalled in the Commons by paymaster general Dawn Primarolo.

Link: Artificial tax avoidance schemes slammed

She told MPs a package of measures to be included in the next Finance Bill ‘will remove certain anomalies and prevent a small number of companies exploiting particular circumstances to pay much less tax than other companies writing similar business’.

She added: ‘The changes will therefore protect the tax base and ensure a fairer distribution of tax across the industry.’

A Treasury notice said the ‘broad structure’ of the current regime for taxing life insurance business would not change.

The changes ‘will prevent loss of tax from transactions such as transfers of business from one company to another, and movements of assets between different parts or funds of a company in order to trigger losses for tax purposes’.

This ‘will not mean additional tax liabilities on straightforward transfers of business, but they will ensure that all gains arising on investments of the business are included in the profits of either the transferor or transferee’.

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