Finance (No. 4) Bill

Session 2010 - 12
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Other Bills before Parliament

Finance (No. 4) Bill

Finance (No. 4) Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 5 — Miscellaneous
30

51
Relief for gift aid and other income of charities etc
Schedule 15 contains provision about relief in respect of gifts qualifying for gift
aid relief and other income of charities and other bodies.
52
Meaning of “community amateur sports club”
(1)
In section 658 of CTA 2010 (meaning of “community amateur sports club”), for
5
subsection (1) substitute—
“(1)
A club is entitled to be registered as a community amateur sports club
if conditions A and B are met.
(1A)
Condition A is that the club is, and is required by its constitution to be,
a club which—
10
(a)
is open to the whole community (see section 659),
(b)
is organised on an amateur basis (see section 660), and
(c)
has as its main purpose the provision of facilities for, and the
promotion of participation in, one or more eligible sports (see
section 661).
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(1B)
Condition B is that the club meets—
(a)
the location condition (see section 661A), and
(b)
the management condition (see section 661B).”
(2)
In consequence of the amendment made by subsection (1), omit paragraph 31
of Schedule 6 to FA 2010.
20
(3)
The amendments made by this section are treated as having come into force on
6 April 2010.
Other provisions
53
Site restoration payments
(1)
In section 168 of ITTOIA 2005 (site restoration payments), at the beginning of
25
subsection (2) insert “Subject to subsection (3A),”.
(2)
For subsection (3) of that section substitute—
“(3)
The deduction is allowed—
(a)
(if the payment is made, whether directly or indirectly, to a
connected person) for the period of account in which that part
30
of the restoration work to which the payment relates is
completed, or
(b)
(in any other case) for the period of account in which the
payment is made.
(3A)
But no deduction is allowed if the payment arises from arrangements—
35
(a)
to which the person carrying on the trade is a party, and
(b)
the main purpose, or one of the main purposes, of which is to
obtain a deduction under this section.”

Finance (No. 4) Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 5 — Miscellaneous
31

(3)
At the end of that section insert—
“(7)
“Arrangements” includes any agreement, understanding, scheme,
transaction or series of transactions (whether or not legally
enforceable).”
(4)
In section 145 of CTA 2009 (site restoration payments), at the beginning of
5
subsection (2) insert “Subject to subsection (3A),”.
(5)
For subsection (3) of that section substitute—
“(3)
The deduction is allowed—
(a)
(if the payment is made, whether directly or indirectly, to a
connected person) for the period of account in which that part
10
of the restoration work to which the payment relates is
completed, or
(b)
(in any other case) for the period of account in which the
payment is made.
(3A)
But no deduction is allowed if the payment arises from arrangements—
15
(a)
to which the company carrying on the trade is a party, and
(b)
the main purpose, or one of the main purposes, of which is to
obtain a deduction under this section.”
(6)
At the end of that section insert—
“(7)
“Arrangements” includes any agreement, understanding, scheme,
20
transaction or series of transactions (whether or not legally
enforceable).”
(7)
The amendments made by this section have effect in relation to any site
restoration payment made on or after 21 March 2012, other than a payment
made pursuant to an unconditional obligation in a contract made before 21
25
March 2012.
(8)
An unconditional obligation is an obligation which may not be varied or
extinguished by the exercise of a right (whether or not under the contract).
54
Changes of accounting policy
(1)
In section 227 of ITTOIA 2005 (adjustment on change of accounting basis:
30
income tax)—
(a)
in subsection (3)(a) for “relevant change of accounting approach”
substitute “change of accounting policy”, and
(b)
for subsection (4) substitute—
“(4)
A “change of accounting policy” includes, in particular—
35
(a)
a change from using UK generally accepted accounting
practice to using generally accepted accounting practice
with respect to accounts prepared in accordance with
international accounting standards, and
(b)
a change from using generally accepted accounting
40
practice with respect to accounts prepared in
accordance with international accounting standards to
using UK generally accepted accounting practice.”

Finance (No. 4) Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 1 — Introductory
32

(2)
In section 180 of CTA 2009 (adjustment on change of accounting basis:
corporation tax)—
(a)
in subsection (3)(a) for “relevant change of accounting approach”
substitute “change of accounting policy”, and
(b)
for subsection (4) substitute—
5
“(4)
A “change of accounting policy” includes, in particular—
(a)
a change from using UK generally accepted accounting
practice to using generally accepted accounting practice
with respect to accounts prepared in accordance with
international accounting standards, and
10
(b)
a change from using generally accepted accounting
practice with respect to accounts prepared in
accordance with international accounting standards to
using UK generally accepted accounting practice.”
(3)
Corresponding amendments are to be treated as having been made in section
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64 of FA 2002.
(4)
In consequence of the amendment made by subsection (1)(b), omit paragraph
2 of Schedule 6 to F(No.2)A 2005.
(5)
The amendments made by this section have effect in relation to a change of
basis if the new basis—
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(a)
is adopted for a period of account which begins on or after 1 January
2012, or
(b)
is adopted for a period of account which begins before 1 January 2012
and the adoption is in consequence of the issue, revocation,
amendment or recognition of, or withdrawal of recognition from, an
25
accounting standard by an accounting body on or after 1 January 2012.
(6)
In this section—
“accounting body” means the International Accounting Standards Board,
the Accounting Standards Board, or a successor body to either of those
Boards;
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“accounting standard” includes any statement of practice, guidance or
other similar document.
Part 2
Insurance companies carrying on long-term business
Chapter 1
35
Introductory
Outline of provisions of Part
55
Overview
(1)
This Part makes special provision for corporation tax purposes in relation to
life assurance business and other long-term business carried on by insurance
40
companies.

Finance (No. 4) Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 1 — Introductory
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(2)
Chapter 1 explains some of the key concepts for the purposes of this Part,
including the concept of basic life assurance and general annuity business
(abbreviated to “BLAGAB”).
(3)
Chapter 2—
(a)
provides for the profits of BLAGAB to be subject to a charge to
5
corporation tax on the I - E basis as the profits of a separate business,
and
(b)
provides for the profits of other long-term business to be charged to
corporation tax under section 35 of CTA 2009 as the profits of a single
trade.
10
(4)
Chapter 3 sets out the rules applicable to the I - E charge (which operate in part
by reference to the calculation of an insurance company’s BLAGAB trade profit
or loss).
(5)
Chapter 4 sets out rules for determining for the purposes of the I - E charge how
to apportion items to an insurance company’s basic life assurance and general
15
annuity business.
(6)
Chapter 5—
(a)
provides for the policyholders’ share of the I - E profit to be charged at
the policyholders’ rate (the basic rate of income tax), and
(b)
provides for policyholder tax to be taken into account in calculating an
20
insurance company’s BLAGAB trade profit or loss.
(7)
Chapter 6 contains special rules that are to apply for the purpose of calculating
an insurance company’s BLAGAB trade profit or loss or the profits of an
insurance company’s other long-term business.
(8)
Chapter 7 sets out rules for determining for the purposes of that calculation
25
how to allocate items between BLAGAB and other long-term business.
(9)
The remainder of the Part contains—
(a)
provision in relation to assets held for the purposes of an insurance
company’s long-term business (see Chapter 8),
(b)
provision for relieving BLAGAB trade losses and restrictions in relation
30
to the policyholders’ share of an I - E profit (see Chapter 9),
(c)
provision in relation to the transfer of BLAGAB or other long-term
business (see Chapter 10), and
(d)
definitions and other supplementary material (see Chapters 11 and 12).
Meaning of “life assurance business”
35
56
Meaning of “life assurance business”
(1)
This section defines for the purposes of this Part what is meant by “life
assurance business”.
(2)
Business is “life assurance business” if—
(a)
it consists of the effecting or carrying out of contracts of insurance
40
which fall within paragraph I, II, III or VII(b) of Part 2 of Schedule 1 to
the FISMA (Regulated Activities) Order 2001, or
(b)
it is capital redemption business (see subsection (3)).

Finance (No. 4) Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 1 — Introductory
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(3)
Business is “capital redemption business” if it consists of the effecting on the
basis of actuarial calculations, and the carrying out, of contracts under which,
in return for one or more fixed payments, a sum of a specified amount (or a
series of sums of a specified amount) become payable at a future time or over
a period.
5
Meaning of “basic life assurance and general annuity business”
57
Meaning of “basic life assurance and general annuity business”
(1)
This section defines for the purposes of this Part what is meant by “basic life
assurance and general annuity business”.
(2)
“Basic life assurance and general annuity business” means life assurance
10
business other than—
(a)
pension business (which is defined for the purposes of this section by
section 58),
(b)
child trust fund business (which is defined for the purposes of this
section by section 59),
15
(c)
individual savings account business (which is defined for the purposes
of this section by section 60),
(d)
business which consists of the effecting or carrying out of immediate
needs annuities (within the meaning of section 725 of ITTOIA 2005),
(e)
re-insurance of life assurance business other than excluded business,
20
(f)
overseas life assurance business (which is defined for the purposes of
this section by section 61), or
(g)
protection business (which is defined for the purposes of this section by
section 62).
(3)
In subsection (2)(e) “excluded business” means business of any description
25
excluded for the purposes of this section by regulations made by HMRC
Commissioners.
58
Section 57: meaning of “pension business”
(1)
This section defines for the purposes of the definition of “basic life assurance
and general annuity business” given by section 57 what is meant by “pension
30
business”.
(2)
Life assurance business is “pension business” if—
(a)
it consists of the effecting or carrying out of contracts entered into for
the purposes of a registered pension scheme, or
(b)
it is the re-insurance of business within paragraph (a).
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(3)
Subsection (4) applies if the pension scheme ceases to be a registered pension
scheme as a result of the withdrawal of its registration under section 157 of FA
2004.
(4)
The company’s life assurance business that was pension business when the
scheme was a registered pension scheme is treated as ceasing to be pension
40
business at the beginning of the company’s period of account in which the
scheme so ceases to be a registered pension scheme.
(5)
If—

Finance (No. 4) Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 1 — Introductory
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(a)
immediately before 6 April 2006 an annuity contract fell within any of
the descriptions of contracts specified in section 431B(2) of ICTA as it
had effect immediately before that date, but
(b)
the contract does not fall to be regarded for the purposes of this section
as having been entered into for the purposes of a registered pension
5
scheme,

the contract is treated for the purposes of this section as having been entered
into for those purposes.
59
Section 57: meaning of “child trust fund business”
(1)
This section defines for the purposes of the definition of “basic life assurance
10
and general annuity business” given by section 57 what is meant by “child trust
fund business”.
(2)
Life assurance business is “child trust fund business” if it consists of the
effecting or carrying out of child trust fund policies.
(3)
But the re-insurance of business consisting of the effecting or carrying out of
15
child trust fund policies is not “child trust fund business”.
(4)
In this section “child trust fund policy” means a policy of life insurance which
is an investment under a child trust fund (within the meaning of the Child
Trust Funds Act 2004).
60
Section 57: meaning of “individual savings account business”
20
(1)
This section defines for the purposes of the definition of “basic life assurance
and general annuity business” given by section 57 what is meant by
“individual savings account business”.
(2)
Life assurance business is “individual savings account business” if it consists
of the effecting or carrying out of individual savings account policies.
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(3)
But the re-insurance of business consisting of the effecting or carrying out of
individual savings account policies is not “individual savings account
business”.
(4)
In this section “individual savings account policy” means a policy of life
insurance which is an investment of a kind specified in regulations made as a
30
result of section 695(1) of ITTOIA 2005.
61
Section 57: meaning of “overseas life assurance business”
(1)
This section defines for the purposes of the definition of “basic life assurance
and general annuity business” given by section 57 what is meant by “overseas
life assurance business”.
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(2)
Life assurance business is “overseas life assurance business” if—
(a)
it consists of the effecting or carrying out of contracts with
policyholders or annuitants who are not resident in the United
Kingdom, and
(b)
it does not consist of excluded business,
40

but the re-insurance of business that meets the conditions in paragraphs (a)
and (b) is not “overseas life assurance business”.

Finance (No. 4) Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 1 — Introductory
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(3)
For this purpose “excluded business” means—
(a)
business which is pension business within the meaning of section 58,
(b)
business which is child trust fund business within the meaning of
section 59,
(c)
business which is individual savings account business within the
5
meaning of section 60, or
(d)
business of any description excluded by regulations made by HMRC
Commissioners.
(4)
HMRC Commissioners may by regulations—
(a)
make provision as to the circumstances in which a trustee who is a
10
policyholder or annuitant residing in the United Kingdom is to be
treated for the purposes of this section as not residing there, and
(b)
provide that nothing in Chapter 9 of Part 4 of ITTOIA 2005 is to apply
to a policy or contract which constitutes overseas life assurance
business as a result of provision made under paragraph (a).
15
(5)
HMRC Commissioners may by regulations make provision for giving effect to
this section.
(6)
Regulations under subsection (5) may—
(a)
provide that, in prescribed circumstances, any prescribed issue as to
whether business is, or is not, overseas life assurance business (or
20
overseas life assurance business of a particular kind) is to be
determined by reference to prescribed matters,
(b)
require companies to obtain certificates, undertakings, information or
declarations from any person for the purposes of the regulations,
(c)
make provision for dealing with cases where any issue within
25
paragraph (a) is (for any reason) wrongly determined, including
provision allowing for charges to tax to be imposed (with or without
limits on time) on the insurance company concerned or on the
policyholders or annuitants concerned,
(d)
require companies to supply information and make available books,
30
documents and other records for inspection by officers of Revenue and
Customs, and
(e)
make provision (including provision imposing penalties) for
contravention of, or non-compliance with, the regulations.
(7)
The matters that may be prescribed under subsection (6)(a) include—
35
(a)
the giving of certificates or undertakings,
(b)
the giving or possession of information, and
(c)
the making of declarations.
(8)
Regulations under this section may—
(a)
make different provision for different cases or circumstances, and
40
(b)
contain incidental, supplementary, consequential, transitional,
transitory or saving provision (including provision amending any
enactment or instrument made under any enactment).
62
Section 57: meaning of “protection business”
(1)
This section defines for the purposes of the definition of “basic life assurance
45
and general annuity business” given by section 57 what is meant by “protection
business”.