GIM9090 - Mutual insurance: tax treatment: accounting periods beginning on or after 1 October 2002: loan relationships

The tax treatment of corporate and government debt – loan relationships – remains governed by Chapter 2 Part 4 FA 1996 (see GIM5120). Where a company carries on general insurance business on a mutual basis, FA96/S103 (3) continues to provide that the activities are not to be treated as constituting a trade or part of a trade. This has the effect that none of the rules applying to trading activities will apply to the profits and losses from loan relationships of such a company. Instead it will be treated as a non-trader for all purposes, so that the various special rules (see GIM9060) which apply only to non-traders will continue to apply to it.