Finance (No. 4) Bill (HC Bill 325)

12 (1) For the purposes of this paragraph a “relevant court-protected item” means a relevant computational item that relates to an excess of assets over liabilities held in a non-profit fund in respect of which an order made by a court is in force preventing the distribution of the excess (in any circumstances whatever) before the end of a period specified in the order.

(2) A receipt within paragraph 9 or 10 consisting of a relevant court-protected item is to be treated as arising over the period of 10 years beginning with the relevant day.

(3) The relevant day is whichever of the following days occurs first—

(a) the day on which the court order ceases to be in force, or

(b) 1 January 2015.

(4) The amount of the receipt apportioned to (and treated as arising in) any accounting period falling wholly or partly in that 10-year period is to be determined in proportion to the number of days of the accounting period falling within that 10-year period.

(5) This paragraph is subject to paragraphs 13 to 15 (transfers and cessation of business etc).

13 (1) This paragraph applies if—

(a) under an insurance business transfer scheme, there is a transfer from one insurance company to another of basic life assurance and general annuity business (or any part of that business) or non-BLAGAB long-term business (or any part of that business),

(b) the transfer is a relevant intra-group transfer, and

(c) the transfer occurs at a time when the full amount of the receipts or expenses within paragraph 9 or 10 of the business the whole or part of which is transferred has not been treated as arising.

(2) A transfer is a “relevant intra-group transfer” for the purposes of this paragraph if—

(a) the transferor and the transferee are members of the same group of companies when the transfer occurs (as determined in accordance with section 170(2) to (11) of TCGA 1992), and

(b) the transferee is within the charge to corporation tax in relation to the transfer.

(3) The receipts or expenses are to continue to be dealt with in accordance with the provisions of this Schedule, but are treated as arising to the transferee

over so much of the 10-year period in question as falls on or after the date on which the transfer takes place.

(4) If only part of a business is transferred—

(a) the appropriate proportion of the receipts or expenses is treated as arising to the transferee over so much of the 10-year period in question as falls on or after the date on which the transfer takes place, and

(b) the remainder of the receipts or expenses is treated as arising to the transferor over so much of that period.

(5) The appropriate proportion of the receipts or expenses of a business is equal to the proportion which the value of the liabilities relating to the part of the business transferred bears to the total value of the liabilities of the whole of the business.

(6) For the purposes of this paragraph and paragraphs 11 and 12 the accounting periods of the transferor and the transferee in which the transfer takes place are deemed to end immediately before the transfer takes place.

14 (1) This paragraph applies if—

(a) under an insurance business transfer scheme, there is a transfer from one insurance company to another of basic life assurance and general annuity business (or any part of that business) or non-BLAGAB long-term business (or any part of that business),

(b) the transfer is not a relevant intra-group transfer for the purposes of paragraph 13, and

(c) the transfer occurs at a time when the full amount of the deemed receipts or expenses of the relevant business has not been treated as arising to the transferor.

(2) The remaining amount of the deemed receipts or expenses of the relevant business is to be treated as arising to the transferor in the accounting period in which the transfer takes place.

(3) In this paragraph references to the deemed receipts or expenses of the relevant business—

(a) are references to the receipts or expenses within paragraph 9 or 10 of the business the whole or part of which is transferred, but

(b) do not include references to so much of those receipts or expenses as fall (or have fallen) to be treated as arising to a company other than the company which is the transferor for the purposes of this paragraph.

15 (1) This paragraph applies if—

(a) an insurance company ceases at any time to carry on basic life assurance and general annuity business or non-BLAGAB long-term business otherwise than as a result of a transfer under an insurance business transfer scheme, and

(b) at that time the full amount of the deemed receipts or expenses of the business concerned has not been treated as arising to the company.

(2) The remaining amount of the deemed receipts or expenses of the business concerned is to be treated as arising to the company in the accounting period in which it ceases to carry on the business concerned.

(3) For the purposes of this paragraph an insurance company is to be regarded as ceasing to carry on a business at any time if, at that time, it ceases to be within the charge to corporation tax in relation to the business.

(4) In this paragraph references to the deemed receipts of the business concerned—

(a) are references to the receipts or expenses within paragraph 9 or 10 of the business concerned, but

(b) do not include references to so much of those receipts or expenses as fall (or have fallen) to be treated as arising to a company other than the company concerned.

Financing-arrangement-funded transfers to shareholders in relation to non-profit funds

16 (1) This paragraph applies if, as at 1 January 2013, an insurance company has an unrelieved charge under subsection (3) of section 83YC of FA 1989 (FAFTS: charge in relevant period of account).

(2) An insurance company has, as at that date, an unrelieved charge under that subsection if either—

(a) that subsection has operated in the case of the company for the period of account ending immediately before that date (“the 2012 period of account”), or

(b) that subsection has operated in the case of the company for one or more earlier periods of account, and the total of the amounts which are the relevant amount for the 2012 period of account or those earlier periods under section 83YD of FA 1989 does not exceed the amount which is the taxed amount under that section.

(3) The appropriate amount of the unrelieved charge is to be treated for the purposes of this Part of this Schedule as if it were a relevant computational item of a negative amount.

(4) The appropriate amount of the unrelieved charge is whichever is the smaller of—

(a) in a case within sub-paragraph (2)(a), the amount brought into account under section 83YC(3) of FA 1989, or, in a case within sub-paragraph (2)(b), the amount by which the taxed amount mentioned there exceeds the relevant amount mentioned there, and

(b) the sum of the outstanding debt amount and the outstanding re-insurance amount.

(5) “The outstanding debt amount” means the total amount of the credits brought into account by the company in relation to a non-profit fund for the purposes of section 83YC of FA 1989 as part of total income—

(a) for the 2012 period of account, or

(b) for any earlier period of account,

in respect of relevant money debts to the extent that they have not been repaid before that date.

(6) “The outstanding re-insurance amount” means the total of the amounts which would (but for section 83YF(2) of FA 1989) have been taken into account in calculating the profits of the company’s life assurance business in accordance with the life assurance trade profits provisions—

(a) for the 2012 period of account, or

(b) for any earlier period of account,

in respect of the re-insurance of relevant liabilities to the extent that they have not ceased to be re-insured before that date.

(7) Any expression which is used in this paragraph and in section 83YC of FA 1989 has the same meaning in this paragraph as in that section.

(8) In this paragraph references to sections 83YC and 83YD of FA 1989 include references to those sections as they have effect in accordance with paragraph 4(2) to (6) of Schedule 17 to FA 2008.

Anti-avoidance

17 (1) This paragraph applies if—

(a) on or after 21 March 2012 an insurance company (“C”) enters into any arrangements or does any other thing directly or indirectly for the purposes of, or in connection with, the operation of the transitional rules, and

(b) the main purpose, or one of the main purposes, of C in entering into the arrangements or doing the other thing is an unallowable purpose.

(2) A purpose is an “unallowable purpose” if—

(a) it consists of securing a tax advantage for C or any other company which is connected to the operation of the transitional rules, or

(b) it is not amongst C’s business or other commercial purposes.

(3) If a tax advantage connected to the operation of the transitional rules arises to C, an officer of Revenue and Customs may make such adjustments as are required to negate the tax advantage so far as referable to the unallowable purpose on a just and reasonable apportionment.

(4) If a tax advantage connected to the operation of the transitional rules arises to a company other than C, an officer of Revenue and Customs may make such adjustments as are required to negate the tax advantage.

(5) The power to make adjustments under this paragraph includes power to make adjustments by any of the following means—

(a) an amendment of the company’s tax return under paragraph 34(2) or (2A) of Schedule 18 to FA 1998 (amendment after enquiry),

(b) an assessment,

(c) the nullifying of a right to repayment,

(d) the requiring of the return of a repayment already made, and

(e) the calculation or recalculation of profits or gains or liability to corporation tax.

(6) Nothing in this paragraph authorises the making of an assessment later than 6 years after the accounting period to which the tax advantage relates.

(7) For the purposes of this paragraph—

(a) “arrangement” includes any agreement, scheme, transaction or understanding (whether or not legally enforceable),

(b) the reference to the operation of the transitional rules is a reference to the operation of any provision made by or under this Part of this Schedule,

(c) one example (among others) of entering into arrangements or otherwise doing something for the purposes of, or in connection with, the operation of those rules is entering into the arrangements or otherwise doing the thing to secure that an item is, or is not, taken into account in calculating the total transitional difference, and

(d) section 1139 of CTA 2010 (meaning of “tax advantage”) applies, but reading references to tax as references to corporation tax.

(8) If C is not within the charge to corporation tax in respect of a part of its activities, C’s business or other commercial purposes for the purposes of this paragraph do not include the purposes of that part of its activities.

(9) This paragraph does not apply in any case if section 132 applies in that case.

18 (1) Paragraph 17 does not apply if, on an application by C, HMRC Commissioners give a notice under this paragraph stating that they are satisfied that the doing of the relevant things is or will be such that no action ought to be taken by an officer of Revenue and Customs under that paragraph.

(2) The reference here to the doing of the relevant things is a reference to the entering into of any arrangements, or the doing of any other thing, directly or indirectly for the purposes of, or in connection with, the operation of the transitional rules (within the meaning of paragraph 17).

19 (1) An application under paragraph 18 must—

(a) be in writing, and

(b) contain particulars of the arrangements or the thing done or proposed to be done.

(2) HMRC Commissioners may by notice require C to provide further particulars in order to enable them to determine the application.

(3) A requirement may be imposed under sub-paragraph (2) within 30 days of the receipt of the application or of any further particulars required under that sub-paragraph.

(4) If a notice under that sub-paragraph is not complied with within 30 days or such longer period as HMRC Commissioners may allow, they need not proceed further on the application.

(5) HMRC Commissioners must give notice to C of their decision on an application under paragraph 18—

(a) within 30 days of receiving the application, or

(b) if they give a notice under sub-paragraph (2), within 30 days of that notice being complied with or within such longer period as may be agreed with C.

(6) If any particulars provided under this paragraph do not fully and accurately disclose all facts and considerations material for the decision of HMRC Commissioners, any resulting notice under paragraph 18 is void.

Overseas life insurance companies

20 Receipts or expenses are not to be treated as arising under this Part of this Schedule in a case where—

(a) an overseas life insurance company has, in accordance with international accounting standards, prepared accounts for a period which includes 31 December 2012, and

(b) parts of the income statements included in those accounts are recognised for the purposes of sections 82A to 83ZA of FA 1989 as a result of provision made by regulation 24 of the Overseas Life Insurance Companies Regulations 2006.

Part 2 Specific transitional provisions

Insurance company with BLAGAB consisting wholly of protection business

21 (1) This paragraph applies if—

(a) in its first accounting period to which this Part applies an insurance company carries on business which, under the old law, would have been basic life assurance and general annuity business,

(b) the business in question consists wholly of the effecting or carrying out of contracts of long-term insurance in relation to which the condition in section 62(2)(a) is met, and

(c) some or all of the contracts are made before 1 January 2013.

(2) On or before the filing date for that accounting period, the company may make an election for the contracts made before that date to be treated for the purposes of section 62 as if they were made on or after that date.

(3) Accordingly, no relief is available for any amount that, but for the election, would have constituted excess BLAGAB expenses for that accounting period.

(4) The election has effect for the first accounting period of the company to which this Part applies and all subsequent accounting periods.

(5) The election is irrevocable.

(6) In this paragraph—

• “the filing date”, in relation to an accounting period of an insurance company, means the date which, for the purposes of paragraph 14 of Schedule 18 to FA 1998, is the filing date for the company’s tax return for that period, and

• “the old law” means the law as it had effect immediately before the day on which this Act is passed.

Disregard of amounts previously taken into account for tax purposes

22 (1) This paragraph applies if, for an accounting period ending before 1 January 2013, an amount is taken into account in calculating the profits of an insurance company arising from life assurance business in accordance with the provisions applicable for the purposes of the taxation of such profits under section 35 of CTA 2009 (charge on trade profits).

(2) For any accounting period beginning on or after 1 January 2013—

(a) the amount is not to be taken into account in calculating the BLAGAB trade profit or loss of any basic life assurance and general annuity business carried on by the company, and

(b) the amount is not to be taken into account in calculating for corporation tax purposes the profits of any non-BLAGAB long-term business carried on by the company.

23 For the purposes of section 76 an expense is to be treated as deductible under another relevant rule so far as it was brought into account at Step 1 in section 76(7) of ICTA as an expense referable to an accounting period ending before 1 January 2013.

Intangible fixed assets

24 (1) This paragraph applies to assets—

(a) which, under the old law, were assets excluded from Part 8 of CTA 2009 (intangible fixed assets), and

(b) which, as a result of provision made by this Part of this Act, become assets which are not excluded from Part 8 of that Act.

(2) Any expenditure incurred before 1 January 2013 on an asset to which this paragraph applies is to be left out of account in determining any amount to be brought into account under Part 8 of CTA 2009.

(3) Section 780 of CTA 2009 (company ceasing to be member of group: deemed realisation and re-acquisition at market value) is not to apply in relation to any asset to which this paragraph applies.

(4) For the purposes of this paragraph references to an asset’s exclusion from Part 8 of CTA 2009 includes its exclusion from that Part except as respects royalties.

(5) In this paragraph “the old law” means the law as it had effect immediately before the day on which this Act is passed.

Assets held for purposes of long-term business

25 (1) The rules in sections 116 to 118 apply in relation to anything occurring on or after 1 January 2013 (and the rules in section 440 of ICTA, including as modified, apply in relation to anything occurring before that date).

(2) Accordingly, the replacement of the rules in section 440 of ICTA with the different rules in sections 116 to 118 is not by itself sufficient to give rise to a deemed disposal and re-acquisition for the purposes of corporation tax on chargeable gains.

26 (1) The rules in sections 119 to 121 apply in relation to securities held on or after 1 January 2013 (and the rules in section 440A of ICTA, including as modified, apply in relation to securities held before that date).

(2) The replacement of the separate holdings given by section 440A of ICTA (including as modified) with the separate holdings given by sections 119 to 121 is, for the purposes of corporation tax on chargeable gains, not to be treated as involving a disposal or acquisition that gives rise to a chargeable gain or allowable loss.

(3) But see paragraph 27 for provision for carrying forward the base cost of the old holdings into the base cost of the new holdings.

27 (1) This paragraph applies if—

(a) immediately before 1 January 2013 securities are treated, as a result of section 440A of ICTA (including as modified), as separate holdings of a company for the purposes of corporation tax, and

(b) the securities that are comprised in those separate holdings (the “old holdings”) are, as at 1 January 2013, comprised in separate holdings of the company as determined by the rules in sections 119 to 121 (the “new holdings”).

(2) Each new holding is treated for the purposes of corporation tax on chargeable gains as if, on 1 January 2013, it had been acquired by the company for a consideration equal to the total of the amounts of the indexed base costs of the old holdings that are carried into the new holding.

(3) In this paragraph references to the indexed base cost of an old holding are—

(a) in relation to a holding which was a separate section 104 holding, references to what would be the indexed pool of expenditure within the meaning of section 110 of TCGA 1992 if the holding were disposed of immediately before 1 January 2013, and

(b) in relation to a holding which was a separate 1982 holding, references to the amount of expenditure together with the indexation allowance that would fall to be deducted if the holding were disposed of immediately before 1 January 2013.

(4) In the case of securities (“new securities”) comprised in a new holding, the amount of the indexed base cost of an old holding that is carried into the new holding is equal to the proportion which the new securities derived from the old holding bear to all of the securities comprised in the old holding.

(5) In this paragraph—

• “1982 holding” has the same meaning as in section 109 of TCGA 1992, and

• “section 104 holding” has the same meaning as in section 104(3) of TCGA 1992.

28 (1) This paragraph applies in a case where—

(a) section 210B(2) to (4) of TCGA 1992 would, but for this Part of this Act, have applied in relation to a disposal and acquisition of section 440A securities, and

(b) the identification in accordance with those subsections of the section 440A securities disposed of with the section 440A securities acquired would have involved—

(i) identifying securities disposed of before 1 January 2013 with securities acquired on or after that date, or

(ii) identifying securities acquired before 1 January 2013 with securities disposed of on or after that date.

(2) The securities disposed of are to be identified with the securities acquired (if necessary applying the rules in section 210B(3) and (4) of TCGA 1992 and subject to section 105(1) of that Act), and—

(a) in a case within sub-paragraph (1)(b)(i), the securities acquired are not therefore to be comprised in a separate holding of securities within any of sections 119 to 121 of this Act, and

(b) in a case within sub-paragraph (1)(b)(ii), the securities acquired are not therefore to be regarded as comprised in a separate holding of securities within section 440A of ICTA (including as applied).

(3) In this paragraph “section 440A securities” has the same meaning as in section 210B of TCGA 1992.

Carry-forward of trading losses and excess management expenses

29 (1) Any unused losses arising to an insurance company in an accounting period ending before 1 January 2013 from gross roll-up business may be relieved in subsequent accounting periods in accordance with section 45 of CTA 2010 (carry forward of trade loss against subsequent trade profits) as if they were losses that had arisen from non-BLAGAB long-term business.

(2) For this purpose a loss is “unused” so far as no relief has been given for it under—

(a) section 436A of ICTA (including as applied by any provision of Part 2 of Schedule 7 to FA 2007), or

(b) any other provision of the Corporation Tax Acts.

30 (1) Any unused losses arising to an insurance company in an accounting period ending before 1 January 2013 from PHI business may be relieved in subsequent accounting periods in accordance with section 45 of CTA 2010 as if they were losses that had arisen from non-BLAGAB long-term business.

(2) For this purpose a loss is “unused” so far as, but for this Part of this Act, it would have been available for carry forward under section 45 of CTA 2010 for use in relation to profits of the PHI business for subsequent accounting periods.

31 (1) The appropriate part of any unused life assurance trade losses arising to an insurance company in an accounting period ending before 1 January 2013 is to be treated for the purposes of section 124 as if it were the unrelieved loss available for relief in subsequent accounting periods in accordance with that section.

(2) A “life assurance trade loss” means a loss arising to an insurance company from life assurance business which is calculated in accordance with the life assurance trade profits provisions.

(3) A life assurance trade loss is “unused” so far as no relief is given for it under—

(a) section 85A or 89 of FA 1989, or

(b) any other provision of the Corporation Tax Acts.

(4) The “appropriate” part of any unused life assurance trade losses is the amount (if any) by which—

(a) the amount of the unused life assurance trade losses, exceeds

(b) the amount of unused losses arising to an insurance company in an accounting period ending before 1 January 2013 from gross roll-up business (with the definition of “unused” in paragraph 29(2)applying here).

32 (1) This paragraph applies if, but for this Part of this Act, an amount would have been carried forward to an accounting period of an insurance company under section 76(12) or (13) of ICTA (expenses of insurance companies).

(2) The amount is to be treated for the purposes of step 5 of section 76 as an expense from a previous accounting period carried forward as a result of

section 73 to the accounting period of the company beginning on 1 January 2013.

33 (1) This paragraph applies if, but for this Part of this Act, any amount of expenses would, as a result of section 86(8) and (9) of FA 1989 (relief for fraction of acquisition expenses for earlier accounting periods), have been relieved in an accounting period of an insurance company beginning on or after 1 January 2013.

(2) Relief is to continue to be given for the expenses in question as follows—

(a) the amount of the relief for each accounting period is to be determined in accordance with section 86(8) and (9) of FA 1989 (despite their repeal by this Part of this Act), and

(b) the relief is to be given by treating the amount of the expenses as deemed BLAGAB management expenses for the accounting periods in question for the purposes of section 76.

(3) But relief is not to be given as a result of sub-paragraph (2) for any expenses for any accounting period (“the period concerned”) if the expenses are reversed in the period concerned or any preceding accounting period.

Relief for BLAGAB trade losses for accounting period beginning on or after 1 January 2013

34 (1) This paragraph applies if—

(a) an insurance company carries on basic life assurance and general annuity business in an accounting period beginning on or after 1 January 2013, and

(b) the company has a BLAGAB trade loss for the accounting period.

(2) For the purposes of section 37(6) of CTA 2010 (as applied by section 123) the company is to be treated as carrying on that business in a previous accounting period if the company carried on life assurance business in that period.

Assets of the shareholder fund

35 (1) This paragraph applies in relation to assets of an insurance company carrying on life assurance business which were assets of the shareholder fund of the company for the period of account ending immediately before 1 January 2013.

(2) Those assets are, in relation to times on or after that date, to be regarded for the purposes of this Part as assets forming part of the long-term business fixed capital of the company (whether or not they would otherwise be so regarded).

(3) An asset is an “asset of the shareholder fund of an insurance company for the period of account ending immediately before 1 January 2013” if it is shown in any of lines 11 to 102 of Form 13 in the company’s periodical return ending immediately before that date in respect of assets other than those of its long-term business.

(4) But an asset is not to be regarded as an asset of the shareholder fund for that period of account if for any accounting period ending before 1 January 2013—

(a) income arising from the asset was, or chargeable gains or allowable losses accruing on any part disposal of the asset for the purposes of

TCGA 1992 were, taken into account for the purposes of the charge to corporation tax on the I minus E basis, or

(b) income arising from the asset was taken into account in calculating the profits of the company in respect of its life assurance business in accordance with the provisions applicable for the purposes of the taxation of such profits under section 35 of CTA 2009 (charge on trade profits).

Part 3 Supplementary

General transitional provision in relation to provisions re-enacted in Part

2

of this Act

36 (1) This paragraph applies where any provision of this Part of this Act re-enacts (with or without modification) an enactment repealed by this Part of this Act.

(2) The repeal and re-enactment does not affect the continuity of the law.

(3) Any subordinate legislation or other thing which—

(a) has been made or done, or has effect as if made or done, under or for the purposes of the repealed provision, and

(b) is in force or effective in relation to accounting periods of insurance companies ending on 31 December 2012,

has effect in relation to subsequent accounting periods of insurance companies as if made or done under or for the purposes of the corresponding provision of this Part of this Act.

(4) Any reference (express or implied) in any enactment, instrument or document to a provision of this Part of this Act is to be read as including, in relation to times, circumstances or purposes in relation to which the corresponding repealed provision had effect, a reference to that corresponding provision.

(5) Any reference (express or implied) in any enactment, instrument or document to a repealed provision is to be read, in relation to times, circumstances or purposes in relation to which the corresponding provision of this Part of this Act has effect, as a reference or (as the context may require) as including a reference to that corresponding provision.

(6) This paragraph is subject to any specific transitional, transitory or saving provision made by or under this Schedule.

(7) The generality of this paragraph is not to be affected by specific transitional, transitory or saving provision made by or under this Schedule.

(8) This paragraph has effect instead of section 17(2) of the Interpretation Act 1978.

Power to make supplementary transitional provision etc

37 (1) The Treasury may by regulations make further transitional, transitory or saving provision in connection with the coming into force of any of the provisions of this Part of this Act.

(2) The provision that may be made by the regulations includes provision (whether by way of textual amendment or otherwise) altering or supplementing the effect of any provision made by or under this Schedule.

(3) The regulations may be made so as to have effect in relation to any period beginning before but ending on or after the day on which the regulations are made (as well as in relation to periods no part of which falls before that day).

38 Any regulations made by the Treasury under any provision of this Schedule may—

(a) make different provision for different cases or circumstances, and

(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.

Interpretation

39 The following expressions have the same meaning in this Schedule as they have in Chapter 1 of Part 12 of ICTA—

• “brought into account” (except in paragraph 24),

• “gross roll-up business”,

• “the I minus E basis”,

• “the life assurance trade profits provisions”,

• “non-profit fund”,

• “period of account”,

• “periodical return”, and

• “PHI business”.

Section 176

SCHEDULE 18 Part

3

: consequential amendments

Income and Corporation Taxes Act 1988

1 ICTA is amended as follows.

2 Omit section 459 (unregistered friendly societies: exemption from tax).

3 Omit section 460 (exemption from tax in respect of life or endowment business).

4 Omit section 461 (taxation in respect of other business).

5 Omit sections 461A to 461C (taxation in respect of other business: incorporated friendly societies qualifying for exemption).

6 Omit section 461D (transfers of business).

7 Omit section 462 (conditions for tax exempt business).

8 Omit section 463 (long-term business of friendly societies: application of Corporation Tax Acts).

9 Omit section 464 (maximum benefits payable to members).

10 Omit section 465 (old societies).

11 Omit section 465A (assets of branch of registered friendly society to be treated as assets of society after incorporation).

12 Omit section 466 (interpretation of Chapter 2 of Part 12).

13 (1) Schedule 15 (qualifying policies) is amended as follows.

(2) In paragraph 3—

(a) in sub-paragraphs (1) and (4)(c), for “tax exempt life or endowment business” substitute “exempt BLAGAB or eligible PHI business”,

(b) in sub-paragraph (8)(b)(i), for “a new society” substitute “a society other than an old society”, and

(c) in sub-paragraph (8)(b)(ii), for “a society other than a new society” substitute “an old society”.

(3) In paragraph 4(3)(b)(ii), for “a new society” substitute “a society other than an old society”.

(4) Omit paragraph 5.

(5) In paragraph 6—

(a) in sub-paragraph (1)—

(i) omit “(as defined in section 466)” in both places, and

(ii) for “tax exempt life or endowment business” substitute “exempt BLAGAB or eligible PHI business”, and

(b) in sub-paragraph (2), for “section 464” substitute “section 160 of the Finance Act 2012”.

(6) After paragraph 6 insert—

“6A Any expression—

(a) which is used in any provision made by any of paragraphs 3 to 6, and

(b) which is used in Part

3

of the Finance Act 2012,

has the same meaning in that provision as it has in that Part.”

Taxation of Chargeable Gains Act 1992

14 TCGA 1992 is amended as follows.

15 In section 100(2B)(b) (exemption for authorised unit trusts etc), for “section 466(2) of the Taxes Act” substitute “section 172 of the Finance Act 2012”.

16 In section 171(5) (transfers within a group: general provisions), for “section 461B of the Taxes Act” substitute “section 165 of the Finance Act 2012”.

Income Tax (Trading and Other Income) Act 2005

17 ITTOIA 2005 is amended as follows.

18 (1) Section 531 (gains from contracts for life insurance etc: cases where income tax not treated as paid) is amended as follows.

(2) In subsection (3)(a), for “tax exempt life or endowment business” substitute “exempt BLAGAB or eligible PHI business”.

(3) In subsection (4), for the definition of “tax exempt life or endowment business” substitute—

• ““exempt BLAGAB or eligible PHI business” has the same meaning as in Part

  3

  of FA 2012 (see sections 154 and 155).”

Corporation Tax Act 2009

19 CTA 2009 is amended as follows.

20 In section A1(2) (overview of the Corporation Tax Acts), after paragraph (k) (as inserted by paragraph 136(b) of Schedule 16 to this Act) insert “, and

(l) Part

3

of that Act (friendly societies carrying on long-term business).”

21 In section 564(1) (section 563: interpretation), for “section 460 of ICTA” substitute “section 158 of FA 2012”.

22 In section 931S(3) (company distributions: meaning of “small company”), in the definition of “friendly society”, for “section 466(2) of ICTA” substitute “section 172 of FA 2012”.

Consequential repeals

23 In consequence of the amendments made by this Schedule, omit the following provisions—

(a) in FA 1990—

(i) section 49(1) to (4),

(ii) section 50, and

(iii) paragraph 6 of Schedule 9,

(b) in FA 1991, paragraphs 1 to 3 of Schedule 9,

(c) in FA 1995, paragraphs 1 and 2 of Schedule 10,

(d) in FA 1996, section 171,

(e) in FA 2007—

(i) section 44,

(ii) paragraphs 40 and 43 of Schedule 7, and

(iii) Schedule 12, and

(f) in FA 2008—

(i) section 44, and

(ii) Schedule 18.

Section 177

SCHEDULE 19 Part

3

: transitional provision

Approvals given for purposes of section 461 or 461C of ICTA

1 Anything which, as a result of section 461(11) or 461A(4) of ICTA, is treated as having been done by HMRC Commissioners on a particular date under a provision of ICTA repealed by this Act is to continue to be treated as having been done by them on that date under the provision of this Part corresponding to that repealed provision, despite the fact that neither section 461(11) nor section 461A(4) of ICTA is rewritten in this Act.

General transitional provision in relation to provisions re-enacted in Part

3

of this Act

2 (1) This paragraph applies where any provision of this Part of this Act re-enacts (with or without modification) an enactment repealed by this Part of this Act.

(2) The repeal and re-enactment does not affect the continuity of the law.

(3) Any subordinate legislation or other thing which—

(a) has been made or done, or has effect as if made or done, under or for the purposes of the repealed provision, and

(b) is in force or effective in relation to accounting periods of friendly societies ending on 31 December 2012,

has effect in relation to subsequent accounting periods of friendly societies as if made or done under or for the purposes of the corresponding provision of this Part of this Act.

(4) Any reference (express or implied) in any enactment, instrument or document to a provision of this Part of this Act is to be read as including, in relation to times, circumstances or purposes in relation to which the corresponding repealed provision had effect, a reference to that corresponding provision.

(5) Any reference (express or implied) in any enactment, instrument or document to a repealed provision is to be read, in relation to times, circumstances or purposes in relation to which the corresponding provision of this Part of this Act has effect, as a reference or (as the context may require) as including a reference to that corresponding provision.

(6) This paragraph is subject to any specific transitional, transitory or saving provision made by or under this Schedule.

(7) The generality of this paragraph is not to be affected by specific transitional, transitory or saving provision made by or under this Schedule.

(8) This paragraph has effect instead of section 17(2) of the Interpretation Act 1978.

Section 180

SCHEDULE 20 Controlled foreign companies and foreign permanent establishments

Part 1 Controlled foreign companies

1 After Part 9 of TIOPA 2010 insert—

“Part 9A

Controlled foreign companies

Chapter 1

Overview

371AA Overview of Part

(1) A charge (“the CFC charge”) is charged under this Part on UK resident companies which have certain interests in CFCs.

(2) The CFC charge is charged by reference to the chargeable profits of CFCs.

(3) A “CFC” is a non-UK resident company which is controlled by a UK resident person or persons (but see subsection (6)).

(4) Chapter 2 sets out the basic details of the CFC charge, including—

(a) the CFC charge gateway (through which profits of a CFC must pass in order to be chargeable profits), and

(b) the steps to be taken for charging the CFC charge.

(5) Chapter 2 is supplemented by Chapters 3 to 17; in particular—

(a) Chapter 3 sets out how to determine which (if any) of Chapters 4 to 8 apply in relation to the profits of a CFC,

(b) so far as applicable, Chapters 4 to 8 set out how to determine which profits (if any) of a CFC pass through the CFC charge gateway, with—

(i) Chapter 4 dealing with profits attributable to UK activities,

(ii) Chapter 5 dealing with non-trading finance profits,

(iii) Chapter 6 dealing with trading finance profits,

(iv) Chapter 7 dealing with profits derived from captive insurance business, and

(v) Chapter 8 dealing with cases involving solo consolidation,

(c) Chapter 9 sets out exemptions for profits from qualifying loan relationships,

(d) Chapters 10 to 14 set out full exemptions from the CFC charge,

(e) Chapter 15 sets out how to determine the persons whose interests in a CFC are relevant to the charging of the CFC charge,

(f) Chapter 16 sets out how to determine the creditable tax of CFCs (for which credit is given against chargeable profits), and

(g) Chapter 17 sets out how to apportion a CFC’s chargeable profits and creditable tax among the persons who have relevant interests in the CFC.

(6) Chapter 18 explains the concept of “control” and also sets out certain cases in which a non-UK resident company is to be taken to be a CFC even though it is not controlled by a UK resident person or persons.

(7) Chapter 19 explains the concepts of “assumed taxable total profits”, “assumed total profits” and “the corporation tax assumptions” which are referred to in this Part.

(8) Chapter 20 contains rules for determining the territory in which a CFC is resident for the purposes of this Part.

(9) Chapter 21 contains provision about the management of the CFC charge, including the collection of sums charged.

(10) Chapter 22 contains supplementary provision, including definitions of terms used in this Part.

(11) Nothing in this Part affects—

(a) the liability to corporation tax of a non-UK resident company in accordance with section 5(2) and (3) of CTA 2009 (non-UK resident companies within the charge to corporation tax), or

(b) the determination of such a company’s chargeable profits for corporation tax purposes in accordance with Chapter 4 of Part 2 of CTA 2009.

(12) This Part is part of the Corporation Tax Acts.

Chapter 2

The CFC charge

371BA Introduction to the CFC charge

(1) The CFC charge is charged in relation to accounting periods of CFCs in accordance with section 371BC.

(2) Section 371BC applies in relation to a CFC’s accounting period if (and only if)—