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Legal & General Assurance Society prepared its accounts each year in accordance with the appropriate regulatory requirements.
Finance Act 1989, s 83 introduced a new approach to identifying parts of an insurance company’s income and gains and this caused a dispute between HMRC and the company.
They disagreed over whether memorandum form 40 relating to the with-profits part of the life and annuity fund was within s 83A(2)(b).
The First-tier Tribunal found in favour of the taxpayer company. HMRC appealed.
The issue before the Upper Tribunal (Tax and Chancery Chamber) was whether memorandum form 40 should be brought into account for the purposes of computing the company’s profits.
The Upper Tribunal concluded that to recognise memorandum form 40 in that way would be inconsistent.
HMRC’s appeal was dismissed.
