Transfers are receipts

Scottish Widows and HMRC made a joint referral to the Special Commissioners over an enquiry into the company's tax returns for the accounting periods ending 31 December 2000 2001 and 2002. The agreed question was: whether in computing the Case I profit or loss of the company for those accounting periods amounts described by the company as transfers from capital reserve and included as part of the entries at line 15 of the Financial Services Authority form 40 'Revenue account' for each period fell to be taken into account as receipts in computing the profit or loss.

If the answer was no as argued by the company it had Case I losses of £1 billion which could be used by another group company for the purpose of group relief.

The issue had arisen after the company had demutualised in 2000.

The Special Commissioners said that...