GIM9100 - Mutual insurance: tax treatment: accounting periods beginning on or after 1 October 2002: exchange gains and losses

Chapter 2 Part 2 FA 1993 and the Alternative Method regulations are repealed. Exchange gains and losses on monetary assets and liabilities are brought into account under the loan relationships legislation as non-trading credits and debits. There are transitional rules where regulation 8 of the Exchange Gains and Losses (Insurance Companies Regulations 1994 (SI1994/3231) applied (cases where the regulation 8A election was not made – see GIM9070). An inserted regulation 7A provides that every asset described in regulation 7 is deemed to be disposed of immediately before the company’s first accounting period to begin on or after 1 October 2002. Any chargeable gain or allowable loss is brought into account at the start of that accounting period unless the company elects under regulation 7B to bring all gains and losses into account at the time the asset ceases to be owned by the company (whether or not the occasion is a disposal for the purposes of the TCGA 1992).

Exchange gains and losses on any monetary items which are money debts but not loan relationships are within FA96/S100. In theory this applies to any gains and losses on technical reserves of a mutual. A submission should be made if any such gains or losses are returned by a mutual general insurer.