PART 2 continued CHAPTER 1 continued
(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.
(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 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 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 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 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
).
(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 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)).
(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.
(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 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),
(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,
(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 excluded for the purposes of this section by regulations made by HMRC Commissioners.
(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 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).
(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 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—
(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 scheme,
the contract is treated for the purposes of this section as having been entered into for those purposes.
(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 “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 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).
(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.
(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 result of section 695(1) of ITTOIA 2005.
(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”.
(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,
but the re-insurance of business that meets the conditions in paragraphs (a)and (b) is not “overseas life assurance business”.
(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 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 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).
(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 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 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, 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—
(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
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision (including provision amending any enactment or instrument made under any enactment).
(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 “protection business”.
(2) Life assurance business is “protection business” if it consists of the effecting or carrying out of any contract of long-term insurance in relation to which the following conditions are met—
(a) the benefits payable cannot exceed the amount of premiums paid except on death or in respect of incapacity due to injury, sickness or other infirmity, and
(b) the contract is made on or after 1 January 2013.
(3) For the purposes of subsection (2)(a) ignore—
(a) any benefit (other than a payment of money) that, when the contract is entered into, is provided as an inducement for entering into the contract and that is not repayable (to any extent) in any circumstances,
(b) any case where the amount by which the benefits can exceed the amount of premiums paid is an insignificant proportion of those premiums, and
(c) any case which a reasonable person, as the policyholder under the policy effected by the contract, can reasonably regard as highly unlikely to arise.
(4) If at any time—
(a) a contract is varied otherwise than as a result of the operation of, or the exercise of rights conferred by, provisions forming part of the contract or a connected arrangement, and
(b) as a result of the variation the contract becomes, or ceases to be, one in respect of which the condition in subsection (2)(a) is met,
the contract is to be treated for the purposes of this section as ending at that time and a new contract (on the varied terms) is to be treated for those purposes as being made immediately after that time.
(5) For this purpose a “connected arrangement”, in relation to a contract, means any agreement or other arrangement entered into in connection with the making of the contract.
(6) If—
(a) a contract (“the new contract”) is made on or after 1 January 2013 as a result of the operation of, or the exercise of rights conferred by, provisions of a contract (“the old contract”) made before that date, and
(b) the provisions of the new contract were (or could have been) determined by reference to provisions of the old contract when the old contract was made,
the new contract is to be regarded for the purposes of this section as if it were made before 1 January 2013.
(1) For the purposes of this Part “long-term business” means—
(a) life assurance business, or
(b) other business which consists of the effecting or carrying out of contracts of long-term insurance.
(2) For the purposes of this Part “PHI business” means the other business mentioned in subsection (1)(b).
For the purposes of this Part—
“contract of insurance” has the meaning given by article 3(1) of the FISMA (Regulated Activities) Order 2001, and
“contract of long-term insurance” means a contract which falls within Part 2 of Schedule 1 to that Order.
(1) This section defines for the purposes of this Part what is meant by an “insurance company”.
(2) A person who carries on the activity of effecting or carrying out contracts of insurance is an “insurance company” if—
(a) the person has permission under Part 4 of FISMA 2000 to carry on that activity,
(b) the person is of the kind mentioned in paragraph 5(d) or (da) of Schedule 3 to FISMA 2000 (EEA passport rights) and carries on that activity in the United Kingdom through a permanent establishment there, or
(c) the person qualifies for authorisation under Schedule 4 to FISMA 2000 (Treaty rights) and carries on that activity in the United Kingdom through a permanent establishment there.
(3) The above definition is subject to the following qualifications—
(a) a friendly society within the meaning of Part
3
is not an insurance company, and
(b) an insurance special purpose vehicle (see section 139) is an insurance company only if, in addition to falling within subsection (2)(a), (b) or (c), it is a BLAGAB group re-insurer.
(4) A person is a “BLAGAB group re-insurer” if for an accounting period—
(a) the person carries on basic life assurance and general annuity business,
(b) it is not the case that substantially all of the person’s long-term business is long-term business other than basic life assurance and general annuity business, and
(c) all of its life assurance business is re-insurance business of a description which is excluded business for the purposes of section 57(2)(e).
(1) If an insurance company carries on—
(a) basic life assurance and general annuity business, and
(b) other long-term business,
the general rule is that business within paragraphs (a) and (b) is to be treated for corporation tax purposes as two separate businesses carried on by the company.
(2) One of the separate businesses is to consist of the basic life assurance and general annuity business.
(3) The other separate business is to be regarded for corporation tax purposes as a single trade consisting of the other long-term business.
(4) If an insurance company carries on—
(a) life assurance business none of which is basic life assurance and general annuity business, and
(b) PHI business,
the company is to be treated for corporation tax purposes as carrying on a single trade consisting of the businesses within paragraphs (a) and (b).
(5) For the purposes of this Part “non-BLAGAB long-term business” means—
(a) a single trade within subsection (3) or (4), or
(b) in a case where an insurance company carries on life assurance business none of which is basic life assurance and general annuity business but does not carry on other long-term business, that life assurance business.
(6) If an insurance company carries on short-term insurance business, that business is to be regarded for corporation tax purposes as a separate trade.
(7) For this purpose “short-term insurance business” means any insurance business which is not long-term business.
(1) There is an exception to the general rule set out in section 66(1) if for an accounting period of an insurance company substantially all of its long-term business is not basic life assurance and general annuity business.
(2) In that case, there is for the accounting period to be no separate business consisting of the company’s basic life assurance and general annuity business.
(3) There is instead to be one business that is to be regarded for corporation tax purposes as a single trade of the company consisting of its long-term business.
(4) That single trade is to be regarded as “non-BLAGAB long-term business” for the purposes of this Part.
(5) Accordingly, references in this Part (apart from in section 66 and this section) to a company’s basic life assurance and general annuity business do not include any business which, as a result of this section, is regarded as non-BLAGAB long-term business.
(1) The charge to corporation tax applies to the I - E profit of the basic life assurance and general annuity business carried on by an insurance company.
(2) For the meaning of “I - E profit”, see section 73.
The charge to corporation tax under section 68 has effect instead of—
(a) the charge to corporation tax on income under section 35 of CTA 2009 (charge to tax on trade profits),
(b) any other charge to corporation tax on income under any other provision of the Corporation Tax Acts that would otherwise have applied, and
(c) the charge to corporation tax on chargeable gains so far as referable, in accordance with Chapter
4
, to the company’s basic life assurance and general annuity business.
(1) The rules set out in Chapter
3
determine whether for an accounting period an insurance company carrying on basic life assurance and general annuity business has an I - E profit or excess BLAGAB expenses (and, if so, the amount of the profit or expenses).
(2) Those rules are referred to in this Part as “the I - E rules”.
(3) The calculation of the I - E profit or excess BLAGAB expenses is to operate by reference to the amounts that are credited or debited in the accounts of the company for a period of account drawn up in accordance with generally accepted accounting practice.
(4) But, in the case of amounts of a particular description, that is subject to any provision which (whether expressly or by implication) provides for that calculation to operate by reference to something else.
(5) For the meaning of “excess BLAGAB expenses”, see section 73.
(1) The charge to corporation tax on income under section 35 of CTA 2009 (charge to tax on trade profits) applies to the profits of non-BLAGAB long-term business carried on by an insurance company.
(2) The rules for calculating those profits are subject to the provision made by—
(a) Chapter
6
(trade calculation rules applying to long-term business),
(b) Chapter
7
(trading apportionment rules), and
(c) section 131 (transfers of business).
(3) Subsection (1) does not apply if the business is mutual business, and in that case no other provision of the Corporation Tax Acts has effect to charge the income of the business to corporation tax.
Nothing in—
(a) this Part, or
(b) any other provision of the Corporation Tax Acts that makes special provision in relation to, or by reference to, long-term business carried on by insurance companies,
is to apply in relation to a company which carries on long-term business which consists wholly of PHI business.
This section sets out rules, in relation to the basic life assurance and general annuity business carried on by an insurance company, for determining whether the company has an I - E profit or excess BLAGAB expenses for an accounting period (and, if so, the amount of the profit or expenses).
Step 1
Calculate the income chargeable for the accounting period that is referable, in accordance with Chapter
4
, to the company’s basic life assurance and general annuity business.
The meaning here of “income” is given by section 74.
Step 2
Calculate the BLAGAB chargeable gains of the company for the accounting period as adjusted for allowable losses (see section 75).
Step 3
Calculate so much of the amount (or the total amount) of any I - E receipt under section 92 or 93(5)(a) as is not taken into account in the calculation required by step 1 or 2.
Step 4
Add together the amounts given by the calculations required by steps 1 to 3.
Reduce the total of those amounts (but not below nil) by the amount of any non-trading deficit which the company has for the accounting period under section 388 of CTA 2009 (loan relationships and derivative contracts).
The result is “I”.
Step 5
Calculate the adjusted BLAGAB management expenses of the company for the accounting period (see section 76).
The result is “E”.
Step 6
Subtract E from I (which, if E is a negative figure, would have the effect of increasing the result of the calculation).
If the result is a positive amount, that is (subject to section 95) the amount for the accounting period chargeable to corporation tax under section 68.
That amount is referred to in this Part as an “I - E profit”.
If the result is a negative amount, that amount is to be carried forward by the company as an expense to its next accounting period to be used in accordance with step 5 of section 76.
(1) In section 73 “income”, in relation to an insurance company, means the following income or credits so far as arising from the company’s long-term business—
(a) income of the company chargeable under Chapter 3 of Part 4 of CTA 2009 in respect of any separate UK property business or overseas property business within section 86(4),
(b) credits in respect of any loan relationships of the company,
(c) credits in respect of any derivative contracts of the company,
(d) credits brought into account by the company under Part 8 of CTA 2009 (intangible fixed assets),
(e) income of the company chargeable under Part 9A of CTA 2009 (company distributions),
(f) income of the company chargeable under Chapter 5 of Part 10 of CTA 2009 (distributions from unauthorised unit trusts),
(g) income of the company chargeable under Chapter 6 of Part 10 of CTA 2009 (sale of foreign dividend coupons),
(h) income of the company chargeable under Chapter 7 of Part 10 of CTA 2009 (annual payments not otherwise charged),
(i) income of the company arising from a source outside the United Kingdom which is chargeable under Chapter 8 of Part 10 of CTA 2009 (income not otherwise charged), and
(j) income of the company chargeable under any provision to which section 1173 of CTA 2010 (miscellaneous charges) applies other than section 752 of CTA 2009 (non-trading gains on intangible fixed assets).
(2) The reference in subsection (1)(a) to income chargeable under Chapter 3 of Part 4 of CTA 2009 includes income chargeable under that Chapter in respect of distributions treated by section 548(5) of CTA 2010 as profits of a UK property business carried on by the company.
(3) References in subsection (1)(b) to (d) to credits need to be read with section 88(3) and (4).
(4) The reference in subsection (1)(j) to income chargeable as mentioned there needs to be read with section 89(1).
(5) For the purposes of this section references to income or credits that are chargeable or brought into account under any provision are to income or credits that, but for sections 68 and 69, would be chargeable or brought into account under that provision.
(6) For the purposes of this section no account is to be taken of income which arises from an asset forming part of the long-term business fixed capital of the company (see section 137).
(1) This section explains for the purposes of section 73 how to calculate the BLAGAB chargeable gains of the company for the accounting period as adjusted for allowable losses.
Step 1
First, calculate the chargeable gains—
that accrue to the company in the accounting period from the disposal of assets held for the purposes of the company’s long-term business, and
that are referable, in accordance with Chapter
4
, to its basic life assurance and general annuity business.
Step 2
Then, deduct from the amount of those gains—
any allowable losses that accrue to the company in the accounting period from the disposal of assets held for the purposes of the company’s long-term business and that are so referable, and
so far as not previously deducted from any chargeable gains, any allowable losses that accrued to the company in a previous accounting period from the disposal of assets held for the purposes of the company’s long-term business and that were so referable.
The resulting amount is the amount of the BLAGAB chargeable gains of the company for the accounting period as adjusted for allowable losses.
The resulting amount is the amount of the BLAGAB chargeable gains of the company for the accounting period as adjusted for allowable losses.
(2) The deduction at step 2 may reduce an amount to nil but no further.
(3) For the purposes of this section no account is to be taken of a chargeable gain or allowable loss accruing to the company on a disposal for the purposes of TCGA 1992 of an asset that forms part of the long-term business fixed capital of the company.
(4) References in this section to chargeable gains or allowable losses are references to those gains or losses as calculated in accordance with the rules contained in TCGA 1992.
This section explains for the purposes of section 73 how to calculate the adjusted BLAGAB management expenses of the company for the accounting period.
Step 1
Calculate the ordinary BLAGAB management expenses of the company referable to the accounting period (see sections 77, 81 and 82).
In making the calculation ignore so much of those expenses as is deductible under other relevant rules (see section 78(2)).
If the company is an overseas life insurance company, see also section 96.
Step 2
If the expenses calculated in accordance with step 1 include acquisition expenses for the purposes of section 79, reduce the amount given by step 1 in accordance with the rules in that section (which, in the typical case, provide for six-sevenths of the adjusted amount of those expenses to be disallowed for the accounting period and relieved instead as deemed BLAGAB management expenses for the next six accounting periods).
Step 3
Calculate the total amount of any deemed BLAGAB management expenses for the accounting period (see section 78(3)).
For this purpose ignore any amounts that have already been included in step 1.
Step 4
Find the basic amount by adding together the amount given by the calculation required by step 1 (adjusted, where relevant, in accordance with step 2) and the amount given by the calculation required by step 3.
Adjust the basic amount by deducting from it any expenses reversed in the accounting period (see section 78(4)) and any BLAGAB trade loss relieved for the accounting period (see section 78(5)).
Step 5
Add together any amounts carried forward as expenses from the previous accounting period to the accounting period as a result of section 73 or 93 to give the carried-forward amount.
Add the carried-forward amount to the basic amount or, as the case may be, the basic amount adjusted in accordance with step 4.
(1) This section explains for the purposes of section 76 what is meant by the “ordinary BLAGAB management expenses of the company referable to the accounting period”.
(2) Amounts are “ordinary BLAGAB management expenses” of the company if—
(a) they are, in accordance with generally accepted accounting practice, debited in accounts drawn up by the company for a period of account (but see subsection (3)),
(b) they are expenses of management of the company’s long-term business that are referable, in accordance with Chapter
4
, to its basic life assurance and general annuity business, and
(c) they are not excluded amounts (see subsections (4) to (7)).
(3) In a case where acquisition expenses (within the meaning of section 80) incurred in the accounting period fall to be debited in successive accounts drawn up for successive periods of account, those expenses are treated instead
as if they were all debited in the accounts drawn up for the first of those periods of account.
(4) The following are “excluded amounts”—
(a) amounts of a capital nature,
(b) re-insurance premiums,
(c) refunds of premiums,
(d) profit commissions and profit participations (however described),
(e) a liability of the company to pay an amount of commission or other expenses so far as exceeding the amount which it could reasonably be expected to pay if sections 68 and 69 were not applicable,
(f) non-commercial amounts payable by the company,
(g) amounts payable in connection with a policy or contract to a policyholder or annuitant under the policy or contract or to any other person entitled to receive benefits under the policy or contract.
(5) For the purposes of subsection (4)(f) expenses or other amounts are “non-commercial amounts” payable by the company so far as the company’s purpose in incurring the liability to make the payment is not a business or other commercial purpose of the company.
(6) Amounts payable as mentioned in paragraph (g) of subsection (4) include—
(a) amounts payable to any person acting on behalf of a person within that paragraph, and
(b) amounts payable to the personal representatives of a deceased person who was (or acted on behalf of a person who was) within that paragraph.
(7) Amounts payable as mentioned in subsection (4)(g) do not include amounts payable to an insurance company which is a policyholder under the policy.
(8) In the case of ordinary BLAGAB management expenses in respect of a period of account which coincides with or falls wholly in an accounting period of the company, all of those expenses are “referable to” the accounting period.
(9) In the case of ordinary BLAGAB management expenses in respect of any other period of account—
(a) those expenses are to be apportioned to the accounting period of the company in accordance with section 1172 of CTA 2010, and
(b) the apportioned amount of those expenses is “referable to” the accounting period.
(1) This section explains for the purposes of section 76 what is meant by—
“other relevant rules”,
“deemed BLAGAB management expenses for the accounting period”,
“expenses reversed in the accounting period”, and
“BLAGAB trade loss relieved for the accounting period”.
(2) An expense is deductible under another “relevant rule” if—
(a) it is deductible as a result of section 92(3),
(b) it is deductible in calculating, for corporation tax purposes, the profits of a property business, or
(c) it is deductible as a result of section 272 of CTA 2009 in calculating income from the letting of rights to work minerals in the United Kingdom.
(3) An amount is a “deemed BLAGAB management expense for the accounting period” if it is treated as such for the purposes of section 76 as a result of—
section 79 or paragraph 33(2) of Schedule 17 (spreading of acquisition expenses),
section 83 (general annuity business),
section 87(3) (losses from property businesses where land held for purposes of long-term business),
section 88(6) (excess of debits in respect of intangible fixed assets),
section 89(2) (excess of miscellaneous losses),
paragraph 16(1) of Schedule 7 to FA 1991 (transitional relief for old general annuity contracts),
section 256(2)(a) of CAA 2001 (allowances in respect of plant or machinery consisting of management asset),
section 391(3) of CTA 2009 (loan relationships: carry forward of surplus to next accounting period),
section 1080(2) of CTA 2009 (additional relief for expenditure on research and development),
section 1162 of CTA 2009 (additional relief for remediation of contaminated or derelict land), or
section 783(6), 785(4) or 791(6) of CTA 2010 (manufactured dividends).
(4) “Expenses reversed in the accounting period” means the total amount of the expenses—
(a) which were relieved in any previous accounting period in accordance with step 1 (as read with step 2) or step 3 of section 76, but
(b) which are subsequently reversed in the accounting period.
(5) A “BLAGAB trade loss relieved for the accounting period” means so much of a BLAGAB trade loss of the company for the accounting period for which relief is given under—
(a) section 37 of CTA 2010 (relief for trade losses against total income), as applied by section 123, or
(b) Chapter 4 of Part 5 of that Act (group relief), as applied by section 125.
(1) This section applies if the ordinary BLAGAB management expenses of an insurance company referable to an accounting period for the purposes of section 76 include acquisition expenses (as defined by section 80) incurred in the accounting period.
(2) In the case of the acquisition expenses—
(a) a reduction is to be made at step 2 in section 76 so as to secure that only one-seventh of the adjusted amount of those expenses counts as ordinary BLAGAB management expenses of the company referable to the accounting period, and
(b) the remainder of that adjusted amount is to be relieved as deemed BLAGAB management expenses for succeeding accounting periods in accordance with the following provisions.
(3) References in this section to the adjusted amount of the acquisition expenses are to—
(a) the amount of those expenses calculated as mentioned in step 1 of section 76 (and see, in particular, section 77(3)), less
(b) any amount of re-insurance commission or any repayment or refund (in whole or in part) that forms part of an I - E receipt of the company for the accounting period as a result of section 92.
(4) The remainder of the adjusted amount of the acquisition expenses is relieved as follows.
(5) One-seventh of the adjusted amount of the acquisition expenses is treated for the purposes of section 76 as a deemed BLAGAB management expense for each succeeding accounting period.
(6) But, if a succeeding accounting period is less than a year, the fraction of that amount to be relieved for that period is proportionately reduced.
(7) The reliefs operate until the whole of the adjusted amount of the acquisition expenses has been used up (and, accordingly, the rules in subsections (5) and (6) have effect subject to this subsection).
(8) The treatment of any part of the adjusted amount of the acquisition expenses as a deemed BLAGAB management expense for an accounting period (“the period concerned”) as set out in subsections (5) to (7) is subject to the following restriction.
(9) If expenses are reversed in the period concerned or any preceding accounting period, any acquisition expenses included in those expenses are not to count as deemed BLAGAB management expenses for the period concerned.
(1) This section explains for the purposes of section 79 what is meant by “acquisition expenses”.
(2) The following are “acquisition expenses”—
(a) commissions (however described) other than commissions for persons who collect premiums from house to house,
(b) any other expenses payable solely for the purpose of the acquisition of business, and
(c) so much of any other expenses payable partly for that purpose, and partly for other purposes, as are properly attributable to the acquisition of business.
(3) The exclusion from paragraph (a) of subsection (2) of commissions for persons who collect premiums from house to house does not prevent their counting as expenses under another paragraph of that subsection.
(4) For the purposes of that subsection “the acquisition of business” includes—
(a) the securing of the payment of increased or additional premiums in respect of a policy of insurance issued in respect of an insurance already made, and
(b) the securing of the payment of increased or additional consideration in respect of an annuity contract already made.
(1) This section applies in relation to amounts which meet the conditions in section 77(2)(a) and (b).
(2) The relevant permissive rules apply for the purpose of treating the amounts as ordinary BLAGAB management expenses for the purposes of section 76 as they apply for the purpose of treating amounts as expenses of management for the purposes of Chapter 2 of Part 16 of CTA 2009 (companies with investment business).
(3) The following provisions of CTA 2009 are “relevant permissive rules”—
(a) section 1000 (costs of setting up employee share ownership trust),
(b) section 1234 (payments for restrictive undertakings),
(c) section 1235 (employees seconded to charities and educational establishments),
(d) section 1237 (counselling and other outplacement expenses),
(e) section 1238(1) to (3) (retraining courses),
(f) sections 1239 to 1242 (redundancy payments and approved contractual payments),
(g) section 1243 (payments made by the Government), and
(h) section 1244 (contributions to local enterprise organisations or urban regeneration companies).
(4) If—
(a) an employer’s liability to corporation tax for an accounting period is determined on the assumption that a deduction for expenditure is allowed as a result of the application by this section of section 1238(1) to (3) of CTA 2009, and
(b) the deduction would not otherwise have been allowed,
section 75(2) to (4) of CTA 2009 (retraining courses: recovery of tax) apply.
(5) If—
(a) an amount is treated as an ordinary BLAGAB management expense as a result of the application by this section of section 1242 of CTA 2009, and
(b) the amount would otherwise be regarded as an acquisition expense for the purposes of section 79,
the expense is not to be so regarded.
(6) Section 1253 of CTA 2009 (contributions to local enterprise organisations or urban regeneration companies: disqualifying benefits) applies in the case of amounts treated, as a result of the application by this section of section 1244 of that Act, as ordinary BLAGAB management expenses as it applies in the case of amounts for which a deduction has been made under section 1219 of that Act as a result of section 1244 of that Act.