INTRODUCTION
Keyman insurance policies are very commonplace. In many
instances they will be implemented without any reference to the
company's tax advisers and without any thought being given to
the tax position. The premium is then included with all other
insurance premiums and the total is claimed as a tax deduction.
However whether or not tax relief is due and the taxability of any
subsequent capital receipts is not straightforward.
LEGISLATION AND REVENUE PRACTICE
Parliamentary statements
On 27 July 1944 the Rt Hon Sir John Anderson gave a
Parliamentary Statement setting out the Revenue's
interpretation of the law as follows:
"... where the premiums are allowed as a trading deduction
then the sum assured will be treated as a trading receipt, if (i)
the sole relationship is that of employer and employee, (ii) the
intention is to meet loss of profits, (iii) it is an annual or
short term insurance."
