IPT04210 - Liability of insurance contracts: Reinsurance: Outline and legal provisions
Paragraph 1 of Schedule 7A to the Finance Act 1994 exempts a contract if it is:
바카라 사이트¦ a contract of reinsurance.
Purpose of the exemption
Reinsurance is a means by which insurers spread their risk. It is one of the ways they protect themselves against the possibility that a large claim might affect their financial stability. They do this by passing some of the premium they have received to a reinsurer, who then covers (or 바카라 사이트śreinsures바카라 사이트ť) some of the original insurer바카라 사이트™s risk. It is also possible that a reinsurer may, in turn, seek to reinsure the 바카라 사이트śreinsurance바카라 사이트ť that they have written. This is known as retrocession. There would be double taxation if both the insurer and the reinsurer accounted for IPT on the premium and so, to prevent such double taxation, reinsurance is exempt from IPT.