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.

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