Appropriate amount

HMRC have published Revenue & Customs Brief 04/09 Technical provisions made by general insurers: the 'appropriate amount' allowable for tax purposes.

Finance Act 2007 repealed legislation that dealt with any differences between the technical provisions set by general insurers in their accounts against claims they expect to have to pay and the eventual outturn of those claims.

The replacement legislation in FA 2007 Sch 11 which is based on the financial accounts allows an HMRC officer to determine an 'appropriate amount'.

If the provisions set at the end of the period of account exceed this amount the excess is not allowed as a tax deduction for that period but a compensating adjustment (increasing the potential deduction) is made in the following period.

The Schedule allows HMRC to make regulations setting out how the appropriate amount is to be determined.

Following extensive consultations with...