§ Mr. Norman Lamontasked the Chancellor of the Exchequer whether he will make a statement about the Inland Revenue practice with regard to determining qualification of life assurance policies for the purposes of the 1968 legislation.
§ Mr. NottYes. The 1968 legislation lays down tests and conditions for determining whether a life assurance policy is a "qualifying" policy so that the policyholder is entitled to various reliefs from tax including relief for the premiums payable.
Advice recently given to the Board of Inland Revenue indicates that this legislation should be interpreted as pre scribing stricter tests than have hitherto been applied and that in particular certain options, which it has been usual to ignore until they are exercised, should properly be regarded as disqualifying a policy from the outset, whether or not they are going to be exercised.
My right hon. Friend will consider what changes in the law may be appropriate; meanwhile the Inland Revenue will maintain its existing practice. Where, under that practice, it would formerly have regarded a policy as ceasing to be qualified by reason of the exercise of an option, it will reserve the right to invoke instead the strict interpretation of the law so as to treat it as disqualified thereafter.