PART 2 continued CHAPTER 11 continued
(6) For the purposes of this section “the ordinary trading rules” means the rules for calculating the profits of a trade for the purposes of the charge to corporation tax on income under section 35 of CTA 2009.
(1) This section explains for the purposes of this Part what is meant by an asset forming part of “the long-term business fixed capital” of an insurance company.
(2) An asset forms part of “the long-term business fixed capital” of the company if—
(a) it is held for the purposes of its long-term business, and
(b) it is a structural asset of that business.
(3) The reference to a structural asset of a company’s long-term business includes shares, debts and loans which—
(a) are held by the company in a fund that is not a with-profits fund, and
(b) are of a kind that, if they had been held on 31 December 2012, their value would have been required to be entered in lines 21 to 24 of Form 13 in the periodical return of the company for the period ending immediately before 1 January 2013 (UK insurance dependants and other insurance dependants).
(4) For the purposes of subsection (3)(b) “periodical return” has the same meaning as it has in Chapter 1 of Part 12 of ICTA.
(5) The Treasury may make regulations providing for assets of a company’s long-term business which are of a description specified in the regulations to be regarded for the purposes of this section as being, or as not being, structural assets of that business.
(1) This section—
(a) defines for the purposes of this Part what is meant by an asset that is matched to a BLAGAB liability or other long-term business liability and what is meant by the whole or a part of an asset being matched, and
(b) explains for those purposes how to work out the part of an asset that is matched to a BLAGAB liability or other long-term business liability.
(2) An asset is matched to a BLAGAB liability if, in accordance with the applicable method, some or all of the income or other return arising from that particular asset is specifically referable to the company’s basic life assurance and general annuity business.
(3) An asset is matched to another long-term business liability if, in accordance with the applicable method, some or all of the income or other return arising from that particular asset is specifically referable to the company’s non-BLAGAB long-term business.
(4) The whole of an asset is matched to a BLAGAB liability if, in accordance with the applicable method, the whole of the income or other return arising from that particular asset is specifically referable to the company’s basic life assurance and general annuity business.
(5) A part of an asset is matched to a BLAGAB liability or other long-term business liability if, in accordance with the applicable method, part of the income or other return arising from that particular asset is specifically referable to the company’s basic life assurance and general annuity business or (as the case may be) its non-BLAGAB long-term business.
(6) A part of an asset is matched to a BLAGAB liability or other long-term business liability in proportion to the income or other return arising from that particular asset that, in accordance with the applicable method, is specifically referable to the company’s basic life assurance and general annuity business or (as the case may be) its non-BLAGAB long-term business.
(7) For the purposes of this section “the applicable method”—
(a) in relation to the company’s basic life assurance and general annuity business, means the method adopted for the purposes of section 98
which has effect in relation to the period of account in which the income or other return arises, and
(b) in relation to the company’s non-BLAGAB long-term business, means the method adopted for the purposes of section 115 which has effect in relation to the period of account in which the income or other return arises.
(8) For the purposes of this section any income or other return arising from an asset is to be regarded as specifically referable to a category of business in accordance with the applicable method in so far as that method is adopted in relation to the income or other return in consequence of a contractual requirement imposed on the company relating to the category of business in question.
(1) In this Part—
“closing”, in relation to a period of account, means the position at the end of the period of account,
“derivative contract” has the same meaning as in Part 7 of CTA 2009,
“fair value”—
in relation to money, means its amount, and
in relation to other assets, means the amount which an independent person selling the assets would get,
“HMRC Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs,
“insurance business transfer scheme” means—
a scheme falling within section 105 of FISMA 2000, including an excluded scheme falling within Case 2, 3, 4 or 5 of subsection (3) of that section, or
a scheme which would fall within that subsection but for subsection (1)(b) of that section,
“insurance special purpose vehicle” means an undertaking which—
assumes risks from insurance or re-insurance undertakings, and
fully funds its exposures to those risks through the proceeds of a debt issue or other financing mechanism where the repayment rights of the providers of the mechanism are subordinated to the re-insurance obligations of the undertaking,
“liabilities”, in relation to an insurance company, means—
the mathematical reserves of the company as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook, and
liabilities of the company (whose value falls to be determined in accordance with section 1.3 of the General Prudential Sourcebook) which arise from deposit back arrangements,
“overseas life insurance company” means an insurance company which is not resident in the United Kingdom but which carries on life assurance business in the United Kingdom through a permanent establishment there,
“re-insurance” includes retrocession,
“UK life insurance company” means an insurance company other than an overseas life insurance company,
“with-profits fund” has the meaning given by the Prudential Sourcebook (Insurers).
(2) In this Part any reference to the debiting or crediting of an amount in accounts drawn up by an insurance company is a reference to bringing in the amount as a debit or credit in—
(a) the company’s profit and loss account, income statement or statement of comprehensive income (or other comprehensive income),
(b) a statement of total recognised gains and losses, or
(c) any other statement of items used in calculating the company’s income or gains, or its losses or expenses, for accounting purposes,
irrespective of how any account or statement within any of paragraphs (a) to (c) is described or otherwise referred to.
(3) For this purpose—
“credit” means an amount which for accounting purposes increases or creates a profit, or reduces a loss, for a period of account, and
“debit” means an amount which for accounting purposes reduces a profit, or increases or creates a loss, for a period of account.
(4) In this section—
“deposit back arrangements” means arrangements by which an amount is deposited by the re-insurer under a contract of re-insurance with the cedant,
“the Insurance Prudential Sourcebook” means the Insurance Prudential Sourcebook made by the Financial Services Authority under FISMA 2000,
“the General Prudential Sourcebook” means the General Prudential Sourcebook made by the Financial Services Authority under FISMA 2000, and
“the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under FISMA 2000.
(1) In this Part—
“FISMA 2000” means the Financial Services and Markets Act 2000, and
“FISMA (Regulated Activities) Order 2001” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
(2) For abbreviations of other Acts, see section 226.
(1) In this Part the following expressions are defined or otherwise explained by the provisions indicated—
| Expression | Where explained |
|---|---|
| basic life assurance and general annuity business (abbreviated to “BLAGAB”) | sections 57 and 67(5) |
| BLAGAB trade loss | section 136 |
| BLAGAB trade profit | section 136 |
| closing | section 139(1) |
| contract of insurance | section 64 |
| contract of long-term insurance | section 64 |
| debiting or crediting an amount in accounts drawn up by a company | section 139(2) and (3) |
| derivative contract | section 139(1) |
| excess BLAGAB expenses | section 73 |
| fair value | section 139(1) |
| HMRC Commissioners | section 139(1) |
| I - E profit | section 73 |
| the I - E rules | section 70(1) and (2) |
| insurance business transfer scheme | section 139(1) |
| insurance company | section 65 |
| insurance special purpose vehicle | section 139(1) |
| liabilities | section 139(1) |
| life assurance business | section 56 |
| long-term business | section 63(1) |
| long-term business fixed capital | section 137 |
| matched (in case of assets matched to a BLAGAB liability or other long-term business liability) | section 138 |
| non-BLAGAB long-term business | sections 66 and 67 |
| non-taxable distributions | section 94(4) and (5) |
| overseas life insurance company | section 139(1) |
| PHI business | section 63(2) |
| re-insurance | section 139(1) |
| UK life insurance company | section 139(1) |
| with-profits fund | section 139(1) |
(2) The expressions in the above table have the same meaning in any other provision of the Corporation Tax Acts that makes special provision in relation to—
(a) insurance companies,
(b) any category of life assurance business carried on by insurance companies, or
(c) long-term business carried on by insurance companies.
2
(1) If, in consequence of the exercise of any power under FISMA 2000, they consider it expedient to do so, the Treasury may by order amend—
(a) this Part, or
(b) any other provision of the Corporation Tax Acts that makes special provision in relation to insurance companies, any category of life assurance business carried on by insurance companies or long-term business carried on by insurance companies.
(2) An order under subsection (1) may be made so as to have effect in relation to—
(a) any period ending on or before the day on which the order is made, or
(b) any period beginning before and ending after that day,
but only if the power under FISMA 2000 is exercised so as to have effect in relation to the period.
(3) An order under subsection (1) may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(1) If, in consequence of any amendment of section 105 of FISMA 2000 (insurance business transfer schemes), they consider it expedient to do so, the Treasury may by order amend—
(a) the definition of “insurance business transfer scheme” given by section 139, or
(b) any other provision of the Corporation Tax Acts that makes special provision in relation to insurance companies, any category of life assurance business carried on by insurance companies or long-term business carried on by insurance companies.
(2) An order under subsection (1) may be made so as to have effect in relation to—
(a) any period ending on or before the day on which the order is made, or
(b) any period beginning before and ending after that day,
but only if the amendment of section 105 of FISMA 2000 has effect in relation to that period.
(3) An order under subsection (1) may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(1) The Treasury may by regulations provide for the Corporation Tax Acts to have effect in relation to overseas life insurance companies subject to such exceptions and other modifications as may be prescribed by the regulations.
(2) The power under subsection (1) includes power to make provision in place of, and in consequence to repeal or revoke, any provision in relation to overseas life insurance companies which is made by or under—
(a) this Part, or
(b) any other provision of the Corporation Tax Acts.
(3) Regulations under subsection (1) may be made so as to have effect in relation to any period ending on or after the day on which the regulations are made.
(4) Regulations under subsection (1) may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(5) The power to make consequential provision conferred by subsection (4)(b)includes power to amend any provision made by or under any Act.
(1) Any power of the Treasury or HMRC Commissioners to make any order or regulations under this Part is exercisable by statutory instrument.
(2) Any statutory instrument containing any order or regulations made by the Treasury or HMRC Commissioners under this Part is subject to annulment in pursuance of a resolution of the House of Commons.
(3) Nothing in this Part that authorises the inclusion of any particular kind of provision in any order or regulations under this Part is to be read as restricting the generality of the provision that may be included in the order or regulations.
Schedule 16 contains minor and consequential amendments.
Schedule 17 contains transitional provision in connection with the coming into force of this Part.
(1) The provisions of this Part (other than section 149) have effect in relation to accounting periods of companies beginning on or after 1 January 2013.
(2) Subsection (1) is subject to the operation of any provision of Schedule 17 in relation to times before that date.
(1) If, apart from this section, an insurance company would have had an accounting period beginning before 1 January 2013 and ending on or after that date, the accounting period of the company is to end instead on 31 December 2012.
(2) Accordingly, the rules in section 10 of CTA 2009 (end of accounting period) are subject to this section.
(1) This Part makes special provision for corporation tax purposes in relation to long-term and other business carried on by friendly societies.
(2) Sections 151 and 152 contain provision for applying provisions of the Corporation Tax Acts relating to insurance companies so that they also apply to friendly societies, subject to provision made by regulations.
(3) Sections 153 to 163 make provision for, and in connection with, a special exemption from corporation tax for BLAGAB or eligible PHI business.
(4) Sections 164 to 169 make provision for, and in connection with, a further exemption from corporation tax for other business.
(5) The remainder of the Part contains—
(a) provision in relation to certain transfer schemes (see section 170),
(b) provision for an exemption from corporation tax for unregistered friendly societies (see section 171), and
(c) definitions and other supplementary material (see sections 172 to 179).
(1) The Corporation Tax Acts apply to—
(a) life assurance business carried on by friendly societies, and
(b) other long-term business carried on by friendly societies,
in the same way as they apply respectively to mutual life assurance business carried on by insurance companies and other long-term business carried on by insurance companies.
(2) Subsection (1) does not apply to business which is exempt BLAGAB or eligible PHI business.
(3) The Treasury may by regulations provide that the Corporation Tax Acts as applied by subsection (1) have effect subject to such exceptions or other modifications as may be prescribed by the regulations.
(4) The regulations may require any part of any business to be treated as a separate business.
(5) The regulations may make provision having retrospective effect.
(6) The regulations may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(1) In this section “the transfer of business rules” means—
(a) Chapter
10
of Part
2
, and
(b) any other provisions of the Corporation Tax Acts that apply on the transfer from an insurance company to another insurance company of the whole or part of its life assurance business or of its other long-term business.
(2) The transfer of business rules apply in the same way—
(a) on the transfer of the whole or part of the business of a friendly society to another friendly society,
(b) on the amalgamation of friendly societies,
(c) on the transfer of the whole or part of the business of a friendly society to a company which is not a friendly society,
(d) on the conversion of a friendly society into a company which is not a friendly society, and
(e) on the transfer of the whole or part of the business of an insurance company to a friendly society.
(3) The Treasury may by regulations provide that the transfer of business rules as applied by subsection (2) have effect subject to such exceptions or other modifications as may be prescribed by the regulations.
(4) The regulations may make provision having retrospective effect.
(5) The regulations may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(1) A friendly society is not liable to pay corporation tax (whether on income or chargeable gains) on its profits arising from exempt BLAGAB or eligible PHI business.
(2) The exemption applies only if the society makes a claim.
(3) For the meaning of “BLAGAB or eligible PHI business”, see section 154.
(4) For the meaning of “exempt” BLAGAB or eligible PHI business, see section 155.
(1) In this Part “BLAGAB or eligible PHI business” means—
(a) basic life assurance and general annuity business, and
(b) any PHI business so far as consisting of the effecting or carrying out of qualifying contracts,
but see subsections (3) and (4) for some qualifications.
(2) A contract is a “qualifying” contract if—
(a) it is made before 1 September 1996, or
(b) it is made on or after that date and it also falls within paragraph I, II or III of Part 2 of Schedule 1 to the FISMA (Regulated Activities) Order 2001.
(3) A contract made before 1 September 1996 which effects a policy affording provision for injury, sickness or other infirmity is to be regarded for the purposes of this Part as forming part of “BLAGAB or eligible PHI business” only if—
(a) the policy also affords assurance for a gross sum independent of injury, sickness or other infirmity,
(b) at least 60% of the total premiums are attributable to the provision afforded during injury, sickness or other infirmity, and
(c) there is no bonus or addition which may be declared or accrue upon the assurance of the gross sum.
(4) Business is not to be regarded as “BLAGAB or eligible PHI business” of a friendly society for the purposes of this Part so far as it consists of the assurance of any annuity the consideration for which consists of sums obtainable—
(a) on the maturity, or
(b) on the surrender,
of any other policy of assurance issued by the society which forms part of its exempt BLAGAB or eligible PHI business.
(1) In this Part “exempt” BLAGAB or eligible PHI business means BLAGAB or eligible PHI business other than non-qualifying business.
(2) Business is “non-qualifying” so far as it consists of—
(a) the assurance of gross sums, or the granting of annuities, which meet the conditions set out in the following table (which vary according to the date on which the contracts in question were made), or
(b) the effecting or carrying out of contracts for the assurance of gross sums which are made on or after 20 March 1991 and which are expressed at the outset not to be made in the course of exempt BLAGAB or eligible PHI business.
(3) This is the table mentioned above—
| Contracts to which assurance or annuities relate | Applicable limit for premiums or gross sums | Applicable limit for annuities |
|---|---|---|
| Contracts made on or after 1 May 1995 | Assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £270 | Granting of annuities of annual amounts exceeding £156 |
| Contracts made on or after 25 July 1991 but before 1 May 1995 | Assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £200 | Granting of annuities of annual amounts exceeding £156 |
| Contracts made on or after 1 September 1990 but before 25 July 1991 | Assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £150 | Granting of annuities of annual amounts exceeding £156 |
| Contracts made on or after 1 September 1987 but before 1 September 1990 | Assurance of gross sums under contracts under which the total premiums payable in any period of 12 months exceed £100 | Granting of annuities of annual amounts exceeding £156 |
| Contracts made on or after 14 March 1984 but before 1 September 1987 | Assurance of gross sums exceeding £750 | Granting of annuities of annual amounts exceeding £156 |
| Contracts made before 14 March 1984 | Assurance of gross sums exceeding £500 | Granting of annuities of annual amounts exceeding £104 |
(4) In applying the limits in the above table in relation to the total premiums payable in any period of 12 months (in the case of contracts made on or after 1 September 1987)—
(a) if the premiums are payable more frequently than annually, ignore an amount equal to 10% of the premiums, and
(b) ignore so much of any premium as is charged on the ground that an exceptional risk of death or disability is involved.
(5) In applying the limits in the above table in the case of contracts made on or after 1 September 1987, ignore any bonus or addition declared upon an annuity.
(6) In applying the limits in the above table in the case of contracts made before 1 September 1987, ignore any bonus or addition which—
(a) is declared upon the assurance of a gross sum or annuity, or
(b) accrues upon the assurance of a gross sum or annuity by reference to an increase in the value of any investments.
(7) In the case of a contract for the assurance of a gross sum under exempt BLAGAB or eligible PHI business made on or after 1 September 1987 but before 1 May 1995, there is a special rule if the amount payable by way of premium under the contract is increased as a result of a variation made—
(a) in the period beginning with 25 July 1991 and ending with 31 July 1992, or
(b) in the period beginning with 1 May 1995 and ending with 31 March 1996.
(8) The rule is that, in relation to any profits relating to the contract as varied, the contract is to be treated for the purposes of the above table as made at the time of the variation.
(1) This section applies to a friendly society if its rules make no provision for it to carry on BLAGAB or eligible PHI business, or other long-term business, consisting of—
(a) the assurance of gross sums exceeding £2,000, or
(b) the granting of annuities of annual amounts exceeding £416.
(2) The table in section 155 applies in relation to a friendly society to which this section applies as if, in the final row of that table—
(a) the reference to £500 were a reference to £2,000, and
(b) the reference to £104 were a reference to £416.
(3) If at any time a friendly society to which this section applies amends its rules so as to cease to be such a friendly society, any part of its BLAGAB or eligible PHI business which—
(a) relates to contracts made before that time, and
(b) immediately before that time was exempt BLAGAB or eligible PHI business,
continues to be exempt BLAGAB or eligible PHI business for the purposes of this Part.
(4) If at any time a friendly society to which this section does not apply amends its rules so as to become a friendly society to which this section applies, any part of its BLAGAB or eligible PHI business which—
(a) relates to contracts made before that time, and
(b) immediately before that time was not exempt BLAGAB or eligible PHI business,
continues not to be exempt BLAGAB or eligible PHI business for the purposes of this Part.
(5) If at any time a friendly society to which this section does not apply acquires by way of transfer of engagements or amalgamation from another friendly society any BLAGAB or eligible PHI business which—
(a) relates to contracts made before that time, and
(b) immediately before that time was exempt BLAGAB or eligible PHI business,
that business continues to be exempt BLAGAB or eligible PHI business for the purposes of this Part.
(6) If at any time a friendly society to which this section applies acquires by way of transfer of engagements or amalgamation from another friendly society any BLAGAB or eligible PHI business which—
(a) relates to contracts made before that time, and
(b) immediately before that time was not exempt BLAGAB or eligible PHI business,
that business continues not to be exempt BLAGAB or eligible PHI business for the purposes of this Part.
(1) If at any time an insurance business transfer scheme transfers any long-term business to a friendly society, any BLAGAB or eligible PHI business which relates to contracts included in the transfer is subsequently not to be capable of being exempt BLAGAB or eligible PHI business for the purposes of this Part.
(2) This rule does not apply in relation to business relating to contracts to which section 158 applied immediately before the transfer had effect.
(1) If at any time an insurance company acquires by way of transfer of engagements from a friendly society any BLAGAB or eligible PHI business which—
(a) relates to contracts made before that time, and
(b) immediately before that time was exempt BLAGAB or eligible PHI business,
that business continues to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.
(2) If at any time a friendly society ceases as a result of section 91 of FSA 1992 (conversion into company) to be registered under that Act, any part of its BLAGAB or eligible PHI business which—
(a) relates to contracts made before that time, and
(b) immediately before that time was exempt BLAGAB or eligible PHI business,
continues to be exempt from corporation tax (whether on income or chargeable gains) on profits arising from it.
(3) If contracts constituting or forming part of the business of a company covered by this section are varied during an accounting period of the company so as to increase the premiums payable under them, the business relating to those
contracts is not exempt from corporation tax for that or any subsequent accounting period.
(4) For the purposes of the Corporation Tax Acts any part of a company’s business which is exempt from corporation tax as a result of this section is to be treated as a separate business from any other business carried on by the company.
(5) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax as a result of this section, the Corporation Tax Acts have effect subject to such exceptions or other modifications as they consider appropriate.
(6) The regulations may make provision having retrospective effect.
(7) The regulations may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(1) The exemption from corporation tax afforded by section 153, 156(3) or (5) or 158 does not apply in relation to so much of the profits arising to a friendly society or insurance company from any business as is attributable to a policy which—
(a) is not a qualifying policy as a result of sub-paragraph (2) of paragraph 6 of Schedule 15 to ICTA and is not an excluded policy, and
(b) would not be a qualifying policy as a result of that sub-paragraph if all excluded policies were ignored.
(2) A policy is an excluded policy if—
(a) it is held otherwise than with the friendly society or insurance company, or
(b) the person who has the contract effecting the policy acquired the rights under it on an assignment otherwise than for money or money’s worth.
(3) This section does not withdraw the exemption from corporation tax afforded by section 153, 156(3) or (5) or 158 in relation to profits arising from any part of a business relating to contracts made on or before 3 May 1966.
(1) This section imposes restrictions on the entitlement of a person to have at any time outstanding contracts with any one or more friendly societies, registered branches or insurance companies (“relevant persons”) which are—
(a) for the assurance of gross sums under business which is afforded exemption from corporation tax under section 153, 156(3) or (5) or 158(see subsections (2) and (3)), or
(b) for the assurance by way of annuity under business which is afforded exemption from corporation tax under any of those provisions (see subsection (4)).
(2) In the case of contracts for the assurance of gross sums made before 1 September 1987, a person is not entitled to have outstanding at any time with relevant persons contracts which, taking them all together, are for the assurance of more than £750 (but see subsection (9)).
(3) In the case of contracts for the assurance of gross sums at least one of which was made on or after that date, a person is not entitled to have outstanding at any time with relevant persons—
(a) contracts under which the total premiums payable in any period of 12 months exceed £270,
(b) contracts made before 1 May 1995 under which the total premiums payable in any period of 12 months exceed £200,
(c) contracts made before 25 July 1991 under which the total premiums payable in any period of 12 months exceed £150, or
(d) contracts made before 1 September 1990 under which the total premiums payable in any period of 12 months exceed £100.
(4) In the case of contracts for the assurance by way of annuity, a person is not entitled to have at any time outstanding with relevant persons contracts which, taking them all together, are for the assurance of more than £156 (but see subsection (9)).
(5) In applying the limits in this section in relation to the total premiums payable in any period of 12 months—
(a) if the premiums are payable more frequently than annually, ignore an amount equal to 10% of the premiums, and
(b) ignore so much of any premium as is charged on the ground that an exceptional risk of death or disability is involved.
(6) In applying the limits in this section, ignore —
(a) any bonus or addition which is declared upon an assurance of a gross sum or annuity or which accrues upon an assurance of a gross sum or annuity by reference to an increase in the value of any investments,
(b) any policy of insurance or annuity contract by means of which the benefits to be provided under an occupational pension scheme (within the meaning of section 150(5) of FA 2004) are secured,
(c) any annuity contract which constitutes, or is issued or held in connection with, a registered pension scheme other than one within paragraph (b), and
(d) any increase in a benefit under a friendly society contract (within the meaning given by section 6 of the Decimal Currency Act 1969) resulting from the adoption of a scheme prescribed or approved under subsection (3) of that section.
(7) In the case of a contract for the assurance of a gross sum made on or after 1 September 1987 but before 1 May 1995, there is a special rule if the amount payable by way of premium under the contract is increased as a result of a variation made—
(a) in the period beginning with 25 July 1991 and ending with 31 July 1992, or
(b) in the period beginning with 1 May 1995 and ending with 31 March 1996.
(8) The rule is that, in relation to times when the contract has effect as varied, the contract is to be treated for the purposes of this section as made at the time of variation.
(9) If a person’s outstanding contracts with relevant persons were contracts which were all made before 14 March 1984—
(a) subsection (2) has effect as if the reference to £750 were a reference to £2,000, and
(b) subsection (4) has effect as if the reference to £156 were a reference to £416.
(1) This section makes further provision for the purposes of section 160 the application of which depends on whether or not a friendly society is an old society.
(2) For the purposes of this Part an “old society” means—
(a) a registered friendly society which was registered before 4 February 1966,
(b) a registered friendly society which was registered in the period beginning with that date and ending with 3 May 1966 and which on or before 3 May 1966 carried on any life or endowment business (within the meaning of section 29 of FA 1966), or
(c) an incorporated friendly society which, before its incorporation, was a registered friendly society within paragraph (a) or (b).
(3) In applying the limits in section 160(3) in relation to the total premiums payable in any period of 12 months, ignore £10 of the premiums payable under any contract made before 1 September 1987 by an old society.
(4) In applying the limits in section 160(3), the premiums under any contract for an annuity which was made before 1 June 1984 by a friendly society other than an old society are to be dealt with as if the contract were for the assurance of a gross sum.
(5) In applying the limits in section 160 in any case where a person has outstanding with relevant persons one or more contracts made after 13 March 1984 and one or more contracts made on or before that date, any contract for an annuity which was made before 1 June 1984 by a friendly society other than an old society is to be regarded—
(a) as a contract for the annual amount concerned, and
(b) as a contract for the assurance of a gross sum equal to 75% of the total premiums which would be payable under the contract if it were to run for its full term or, as the case may be, if the member concerned were to die at the age of 75.
A friendly society, registered branch or insurance company may require a person to make and sign a statutory declaration—
(a) that the total amount assured under outstanding contracts entered into by that person with any one or more friendly societies, registered branches or insurance companies (taken together) does not exceed the limits set out in section 160, and
(b) that the total premiums under those contracts do not exceed those limits.
(1) HMRC Commissioners may give a direction under this section to an old society.
(2) The Commissioners may give the direction if—
(a) the society begins to carry on exempt BLAGAB or eligible PHI business or, in their opinion, begins to carry on exempt BLAGAB or eligible PHI business on an enlarged scale or of a new character, and
(b) it appears to them, having regard to the restrictions placed on qualifying policies issued by friendly societies other than old societies by paragraphs 3(1)(b) and 4(3)(b) of Schedule 15 to ICTA, that for the protection of the revenue it is expedient to give the direction.
(3) The direction is that (and has the effect that) the society is to be treated for the purposes of this Part and Schedule 15 to ICTA as a friendly society other than an old society with respect to business carried on after the date of the direction.
(4) The society may appeal against the direction on the ground that—
(a) it has not begun to carry on business as mentioned in subsection (2)(a), or
(b) the direction is not necessary for the protection of the revenue.
(5) The appeal must be made within 30 days of the date on which the direction is given.
(6) If a registered friendly society in respect of which a direction is in force under this section becomes an incorporated friendly society, the direction continues to have effect, so that for the purposes of this Part and Schedule 15 to ICTA it is treated as a friendly society other than an old society.
(1) A registered friendly society which is a qualifying society is not liable to pay corporation tax (whether on income or chargeable gains) on its profits other than those arising from—
(a) life assurance business, or
(b) PHI business comprised in BLAGAB or eligible PHI business.
(2) A registered friendly society is a qualifying society if—
(a) it was registered before 1 June 1973 (but see section 168 for circumstances in which it ceases to be a qualifying society),
(b) it is registered on or after that date and its business is limited to the provision, in accordance with its rules, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by HMRC Commissioners, or
(c) it is registered on or after that date but before 27 March 1974 and its rules limit the total amount which may be paid by a member by way of contributions and deposits to not more than £1 per month or such greater amount as HMRC Commissioners may authorise for the purposes of this section.
(3) For the purposes of this section a registered friendly society formed on the amalgamation of two or more friendly societies is treated as registered before 1 June 1973 if, at the time of amalgamation, each of the societies amalgamated was a qualifying society (but otherwise is treated as registered at that time).
(4) The exemption applies only if the society makes a claim.
(1) An incorporated friendly society which is a qualifying society is not liable to pay corporation tax (whether on income or chargeable gains) on its profits other than those arising from—
(a) life assurance business, or
(b) PHI business comprised in BLAGAB or eligible PHI business.
(2) An incorporated friendly society is a qualifying society if it falls within any of cases A to C (but see section 168 for circumstances in which it ceases to be a qualifying society).
(3) Case A is that, immediately before its incorporation, it was a registered friendly society which was a qualifying society within the meaning of section 164.
(4) Case B is that—
(a) it was formed otherwise than by the incorporation of a registered friendly society or the amalgamation of two or more friendly societies, and
(b) its business is limited to the provision, in accordance with its rules, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by HMRC Commissioners.
(5) Case C is that—
(a) it was formed by the amalgamation of two or more friendly societies, and
(b) at the time of the amalgamation each of the societies being amalgamated was a qualifying society within the meaning of section 164 or this section.
(6) The exemption applies only if the society makes a claim.
(7) The exemption does not apply to any profits arising or accruing to the society from, or by reason of its interest in, a body corporate—
(a) which is a subsidiary of the society (within the meaning of FSA 1992), or
(b) of which the society has joint control (within the meaning of FSA 1992).
(1) For the purposes of this Part “relevant other business” means any business other than—
(a) life assurance business, or
(b) PHI business comprised in BLAGAB or eligible PHI business.
(2) If—
(a) at any time an insurance company acquires by way of transfer of engagements from a friendly society any relevant other business, and
(b) immediately before that time the society was exempt from corporation tax on profits arising from that business as a result of section 164 or 165,
the insurance company is exempt from corporation tax on its profits arising from the relevant other business so far as relating to contracts made before that time.
(3) If a friendly society—
(a) at any time ceases as a result of section 91 of FSA 1992 (conversion into company) to be registered under that Act, and
(b) immediately before that time the society was, as a result of section 164or 165, exempt from corporation tax on profits arising from any relevant other business carried on by it,
the company into which the society is converted is exempt from corporation tax on its profits arising from the relevant other business so far as relating to contracts made before that time.
(4) If during an accounting period of a company there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on relevant other business relating to contracts made before the time of transfer or conversion, the company is not exempt from corporation tax as a result of this section for that or any subsequent accounting period.
(5) For the purposes of the Corporation Tax Acts any part of a company’s business which is exempt from corporation tax as a result of this section is to be treated as a separate business from any other business carried on by the company.
(6) The Treasury may by regulations provide that, where any part of the business of a company is exempt from corporation tax as a result of this section, the Corporation Tax Acts have effect subject to such exceptions or other modifications as they consider appropriate.
(7) The regulations may make provision having retrospective effect.
(8) The regulations may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(1) If—
(a) at any time a friendly society acquires by way of transfer of engagements or amalgamation from another friendly society any relevant other business, and
(b) immediately before that time the transferor was exempt from corporation tax on profits arising from that business as a result of section 164 or 165,
the transferee is exempt from corporation tax on its profits arising from the relevant other business so far as relating to contracts made before that time.
(2) If during an accounting period of the transferee there is an increase in the scale of benefits which it undertakes to provide in the course of carrying on relevant other business relating to contracts made before that time, the transferee is not exempt from corporation tax as a result of this section for that or any subsequent accounting period.
(3) If—
(a) at any time a friendly society acquires by way of transfer of engagements or amalgamation from another friendly society any relevant other business, and