Section 32 Insurers in difficulties: write-down orders for corporation tax purposes

In Part 3 of CTA 2009 (trading income), after section 130 insert—

“Insurers in financial difficulties: write-down orders

130A

(1)

A receipt or expense that is attributable to the operation of a write-down order, or to a write-down order ceasing to have effect, is not brought into account in calculating the profits of a trade.

(2)

In this section “write-down order” means an order under section 377A of the Financial Services and Markets Act 2000 (court order writing down liabilities of insurer).”

Part 5 of CTA 2009 (loan relationships) is amended as follows.

After section 323A insert—

“Insurers in financial difficulties: write-down orders

323B

(1)

Subsection (2) applies if a debtor relationship of a company is modified by a write-down order.

(2)

The company is not required to bring into account for the purposes of this Part a credit in respect of any change in the carrying value of the liability representing the modified debtor relationship.

(3)

If as a result of subsection (2) no credit was brought into account in respect of a change in the carrying value of a liability representing a debtor relationship, the company may not bring into account a debit for the purposes of this Part in respect of a change in the carrying value of that liability, to the extent that the change represents a reversal of the change in carrying value to which subsection (2) applied.

(4)

In this section “write-down order” means an order under section 377A of the Financial Services and Markets Act 2000 (court order writing down liabilities of insurer).”

In section 465B (“tax-adjusted carrying value”), in subsection (9), after paragraph (d) insert—

“(da)

section 323B (insurers in financial difficulties: write-down orders),”.