Partial success

An insurance company's business included basic life assurance and general annuity business. For its tax computations for the years ending 2002 and 2003 the appellant sought for accounting periods beginning before 1 January 2003 to carry forward Case I trading losses from previous years under TA 1988 s 393(1) ('Losses other than terminal losses') and set against Case I profit for the years as calculated for the purposes of FA 1989 s 89(1) ('Policyholder's share of profits').

HMRC rejected the computations saying that the phrase in s 89(1) 'Case I profits of the company for the [accounting period]' could not include losses which had accrued in earlier periods.

The Special Commissioner said that for accounting periods before 1 January 2003 trading losses carried forward from previous years were taken into account in determining the 'Case I profits for the company for the period...