Section 562 — Corporation Tax Act 2009: Contract to be loan relationship

Contract to be loan relationship 562 1 If a relevant company is a party to an investment life insurance contract, for the purposes of Part 5 (loan relationships) the contract is, in relation to the company, a creditor relationship of the company.

2 Subsection (1) is subject to subsection (4).

3 Subsection (4) applies if—

a the amount or value of a lump sum payable under an investment life contract by reason of death or the onset of critical illness, exceeds b the surrender value of the contract immediately before the time when the lump sum becomes payable.

4 If this subsection applies, that excess is not to be brought into account as a credit under Part 5 representing a profit from a related transaction arising as a result of the lump sum becoming payable.