Section 565 — Corporation Tax Act 2009: Relevant amount where the relevant company uses fair value accounting

Relevant amount where the relevant company uses fair value accounting 565 1 This section applies if the relevant company brings credits and debits in respect of the investment life insurance contract into account on the basis of fair value accounting.

2 If this section applies, the relevant amount for section 563 is— PC × AR 100 - AR where— PC is the profit from the contract (see subsections (3) and (4)), and AR is the appropriate rate for the accounting period (as defined in section 563(6)).

3 For the purposes of this section, except where subsection (4) applies, the profit from the contract is any amount by which—

a the amount payable as a result of the related transaction, exceeds b the fair value of the contract at the beginning time (see subsection (6)).

4 If the related transaction is an assignment or surrender of only part of the rights conferred by the contract, the profit from the contract is any amount by which—

a the amount payable as a result of the related transaction, exceeds b the relevant fraction of the fair value of the contract at the beginning time.

5 In subsection (4) “ the relevant fraction ” means— C FVC where— C is the amount payable as a result of the related transaction, and FVC is the fair value of the contract immediately before the related transaction.

6 In this section “ the beginning time ” means—

a if the contract was made before the beginning of the first accounting period of the company beginning on or after 1st April 2008, at the beginning of that period, and b otherwise when the contract was made.