Revenue increased 6% year-on-year to £39m for the Chartered Insurance Institute (CII) as it returned to operating profit in 2021 but the professional body faces a potential tax bill of up to £2.5m.

The professional body says in its 2021 Financial Statement that the institute is, “on the road to financial recovery”, having reduced operating costs by £5.17m last year to £36m.

Around £2m of this cost saving was made by reducing staff costs.

A large proportion of the cost cutting was made by combining two offices into one due to a 'digital transformation' enabling CII staff to work anywhere.

The CII returned to a consolidated operating surplus of £3.3m for 2021 following a £4m deficit in 2020.

There was a £2.2m increase in revenue from qualifications and education activities.

The CII also revealed that, following discussions with HMRC, the taxman is currently performing an assessment of the CII’s historic tax provisions.

HMRC has told the CII that it could be looking at a potential tax liability of between £1.35m and £2.45m.

The CII had already set aside £2m for this tax bill in 2021, but the professional body said it may need to increase this figure following the review.

At the end of 2021 the CII’s total membership was 123,870, a drop of 1,541 from the end of 2020.

Another financial milestone in 2021 was the CII’s decision to proceed with the buy-out of its defined benefit pension scheme. The first step of this process completed in 2021 was an initial buy-in of £6.6m.

By mid-2023, the CII hopes to be able to complete the pension buy-out, which will result in future operating surpluses no longer being needed to address financial liabilities accrued in the past.

As a result of the tax provision, plus the £6.6m defined benefit pension, cost the CII reported an overall total deficit of £4.4m for 2021.