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88 | Loan relationships, derivative contracts and intangible fixed assets |
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(1) | This section applies if an insurance company has— |
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(a) | credits or debits in respect of any loan relationships, |
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(b) | credits or debits in respect of any derivative contracts, or |
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(c) | credits or debits brought into account by the company under Part 8 of |
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CTA 2009 (intangible fixed assets), |
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| that are referable, in accordance with Chapter 4, to its basic life assurance and |
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general annuity business. |
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(2) | In the application of the I - E rules in relation to the company’s basic life |
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assurance and general annuity business— |
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(a) | the loan relationship rules, |
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(b) | the derivative contract rules, and |
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(c) | the intangible fixed asset rules, |
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| have effect as if the activities carried on by the company in the course of its |
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basic life assurance and general annuity business did not constitute the whole |
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or any part of a trade or of a property business. |
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(3) | In the application of the I - E rules for an accounting period in relation to the |
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company’s basic life assurance and general annuity business— |
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(a) | BLAGAB credits in respect of its loan relationships for the period are to |
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count as income for the purposes of those rules only in so far as they |
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exceed BLAGAB debits in respect of its loan relationships for the |
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(b) | BLAGAB credits brought into account by the company under Part 8 of |
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CTA 2009 for the period are to count as income for the purposes of |
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those rules only in so far as they exceed BLAGAB debits brought into |
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account by the company under that Part for the period. |
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(4) | References in subsection (3)(a) to BLAGAB credits or BLAGAB debits in |
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respect of a company’s loan relationships include, as a result of subsection (2) |
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and section 574 of CTA 2009, BLAGAB credits or BLAGAB debits in respect of |
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the company’s derivative contracts. |
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(5) | If for an accounting period the BLAGAB debits mentioned in subsection (3)(a) |
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exceed the BLAGAB credits mentioned there, the excess is dealt with in |
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accordance with sections 388 to 391 of CTA 2009. |
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(6) | If for an accounting period the BLAGAB debits mentioned in subsection (3)(b) |
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exceed the BLAGAB credits mentioned there, the excess— |
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(a) | is carried forward to the next accounting period, and |
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(b) | is treated for the purposes of section 76 as a deemed BLAGAB |
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management expense for that period. |
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“BLAGAB credits”, in relation to a company, means credits arising from |
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the company’s long-term business that are referable, in accordance |
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with Chapter 4, to its basic life assurance and general annuity business, |
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“BLAGAB debits”, in relation to a company, means debits arising from the |
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company’s long-term business that are referable, in accordance with |
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Chapter 4, to its basic life assurance and general annuity business, |
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“the loan relationship rules” means the rules set out in Part 5 of CTA 2009 |
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(including provisions of other enactments by reference to which |
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amounts are to be brought into account for the purposes of that Part), |
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“the derivative contract rules” means the rules set out in Part 7 of CTA |
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“the intangible fixed asset rules” means the rules set out in Part 8 of CTA |
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89 | Miscellaneous income and losses |
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(1) | In the application of the I - E rules for an accounting period in relation to an |
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insurance company’s basic life assurance and general annuity business, |
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BLAGAB miscellaneous income of the company for the period is to count as |
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income for the purposes of those rules only in so far as it exceeds BLAGAB |
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miscellaneous losses of the company for the period. |
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(2) | If for an accounting period the BLAGAB miscellaneous losses exceed the |
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BLAGAB miscellaneous income, the excess— |
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(a) | is carried forward to the next accounting period, and |
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(b) | is treated for the purposes of section 76 as a deemed BLAGAB |
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management expense for that period. |
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“BLAGAB miscellaneous income”, in relation to a company, means |
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income of the company arising from its long-term business which— |
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(a) | is chargeable under any provision to which section 1173 of CTA |
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2010 (miscellaneous charges) applies other than section 752 of |
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CTA 2009 (non-trading gains on intangible fixed assets), and |
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(b) | is referable, in accordance with Chapter 4, to the company’s |
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basic life assurance and general annuity business, and |
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“BLAGAB miscellaneous losses”, in relation to a company, means losses |
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of the company arising from its long-term business which— |
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(a) | arise from miscellaneous transactions, and |
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(b) | are referable, in accordance with Chapter 4, to the company’s |
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basic life assurance and general annuity business. |
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(4) | For the purposes of subsection (3) a transaction is a “miscellaneous |
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transaction” if income arising from it would be chargeable under any provision |
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to which section 1173 of CTA 2010 applies other than— |
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(a) | section 752 of CTA 2009, or |
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(b) | regulation 18(4) of the Offshore Funds (Tax) Regulations 2009 (offshore |
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(5) | For the purposes of this section references to income that is chargeable under |
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any provision to which section 1173 of CTA 2010 applies are to income that, but |
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for sections 68 and 69, would be chargeable under that provision. |
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90 | Investment return where risk in respect of policy or contract re-insured |
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(1) | This section applies if an insurance company re-insures any risk in respect of a |
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policy or contract attributable to its basic life assurance and general annuity |
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(2) | For the purposes of the I - E rules the investment return on the policy or |
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contract is treated as accruing to the company while the risk remains re- |
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insured by the company under the re-insurance arrangement. |
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(3) | The investment return that is treated as accruing to the company— |
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(a) | is treated for the purposes of those rules as income that is referable, in |
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accordance with Chapter 4, to the company’s basic life assurance and |
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general annuity business, and |
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(b) | is, accordingly, brought into account for the purposes of those rules at |
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(4) | HMRC Commissioners may make provision by regulations as to the amount |
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of investment return that is treated as accruing in each accounting period |
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during which the re-insurance arrangement is in force. |
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(5) | HMRC Commissioners may by regulations exclude from the operation of this |
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(a) | such descriptions of insurance company, |
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(b) | such descriptions of policies or contracts, and |
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(c) | such descriptions of re-insurance arrangement, |
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| as may be prescribed by the regulations. |
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(6) | Nothing in this section applies in relation to the re-insurance of a policy or |
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contract where the policy or contract was made, and the re-insurance |
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arrangement effected, before 29 November 1994. |
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91 | Regulations under section 90(4): supplementary provision |
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(1) | This section applies to regulations under section 90(4). |
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(2) | The regulations may provide for the calculation of the investment return |
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treated as accruing to a company in respect of a policy or contract in an |
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accounting period to be made by reference to— |
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(a) | the total amount of sums paid (by way of premium or otherwise) by the |
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company to the re-insurer during the accounting period and any earlier |
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(b) | the total amount of sums paid (by way of commission or otherwise) by |
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the re-insurer to the company during the accounting period and any |
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earlier accounting periods, |
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(c) | the total amount of the net investment return treated as accruing to the |
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company in any earlier accounting periods, that is to say, net of tax at |
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such rate as may be prescribed by the regulations, and |
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(d) | such percentage rate of return as may be prescribed by the regulations. |
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(3) | The regulations may make provision dealing with the transfer of the re- |
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insurance arrangement from one insurance company to another. |
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(4) | The regulations must provide that the amount of investment return treated as |
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accruing in respect of a policy or contract in the final accounting period during |
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which the policy or contract is in force is the amount, ascertained in accordance |
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with the regulations, by which the overall profit exceeds the total amount |
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treated as accruing in earlier accounting periods. |
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(5) | “The overall profit” means the profit over the whole period during which the |
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policy or contract, and the re-insurance arrangement, were in force. |
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(6) | If the overall profit is less than the total amount treated as accruing in earlier |
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accounting periods, the difference— |
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(a) | must be set off against amounts treated as a result of section 90 as |
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accruing in the final accounting period from other policies or contracts, |
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(b) | if not fully set off as mentioned in paragraph (a), may be carried |
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forward for set-off against amounts treated as a result of that section as |
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accruing in subsequent accounting periods. |
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(a) | make different provision for different cases or circumstances, and |
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(b) | contain incidental, supplementary, consequential, transitional, |
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transitory or saving provision. |
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(8) | An example of the kind of supplementary provision within subsection (7)(b) is |
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provision requiring payments made during an accounting period to be treated |
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as made on such date or dates as may be prescribed by the regulations. |
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92 | Certain BLAGAB trading receipts to count as deemed I - E receipts |
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(1) | This section applies if— |
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(a) | an insurance company has receipts that are taken into account in |
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calculating its BLAGAB trade profit or loss (see section 136) for an |
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(b) | the receipts would not fall within the charge to corporation tax apart |
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(c) | the receipts are not excluded receipts. |
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(2) | The appropriate amount of the receipts is an I - E receipt of the company for the |
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(3) | The “appropriate amount” of the receipts is found by deducting expenses from |
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the receipts so far as is necessary for calculating the full amount of the profits. |
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(4) | Chapter 1 of Part 20 of CTA 2009 (general rules for restricting deductions) is to |
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apply to that calculation. |
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(5) | The following receipts are “excluded” receipts— |
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(b) | sums received under re-insurance contracts (but see subsection (6) for |
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(c) | sums which do not fall within the charge to corporation tax because of |
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(d) | payments received under the Financial Services Compensation |
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(e) | payments received from other insurance companies to enable the |
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company to meet its obligations to policyholders. |
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(6) | A sum received under a re-insurance contract is not an excluded receipt if— |
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(a) | it is a re-insurance commission (however described), or |
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(b) | it is a sum calculated to any extent by reference to the ordinary |
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BLAGAB management expenses of the company referable to the |
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accounting period (within the meaning of section 77). |
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