[IPTM3596] Calculating gains – recalculating a wholly disproportionate gain under s507A and s512A ITTOIA 2005
Following a part surrender or part assignment of a life insurance policy, sections 507A and 512A allow an interested person to apply to an officer of HMRC to recalculate a gain on a just and reasonable basis. A recalculation will be performed on this basis if the officer decides that the gain is wholly disproportionate.
The phrase ‘wholly disproportionate’ sets a high threshold. It is anticipated that there will be only very limited circumstances in which a gain will be regarded as wholly disproportionate and thus give rise to a recalculation.