Finance Bill

Session 2012 - 13
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Finance Bill

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
376

“internal linked fund”, in relation to an insurance company,
means an account—
(a)
to which assets matched to the company’s life
assurance liabilities are appropriated by the
company, and
5
(b)
which may be divided into units the value of which is
determined by the company by reference to the value
of those assets, and
“section 119 or 120 securities” means securities within the
meaning of section 119 or 120 of the Finance Act 2012 (see
10
section 121(6)).”
      (5)
In the heading, for “section 440A securities” substitute “section 119 or 120
securities”.
82
In section 210C(2) (losses on disposal of authorised investment fund assets
to connected manager), in the definition of “authorised investment fund
15
assets”, for “of the company’s long-term insurance fund consisting of”
substitute “held by the company for the purposes of its long-term business
that consist of”.
83    (1)
Section 211 (transfers of business) is amended as follows.
      (2)
In subsection (2)—
20
(a)
in paragraph (a), for “of the transferor’s long-term insurance fund”
substitute “held by the transferor for the purposes of its long-term
business”, and
(b)
in paragraph (b), for “of the transferee’s long-term insurance fund”
substitute “held by the transferee for the purposes of its long-term
25
business”.
      (3)
In subsection (2A), for “structural assets within the meaning of section 83XA
of the Finance Act 1989” substitute “assets which formed part of the long-
term business fixed capital of the company in question”.
      (4)
After subsection (3) insert—
30
“(4)
Subsection (2) does not apply in relation to assets which are referable
to the long-term business of the transferor if all the income of the
transferor’s long-term business is chargeable to corporation tax on
income under section 35 of CTA 2009.”
84
In section 211ZA(10) (transfers of business: transfer of unused losses), for
35
“(in accordance with section 432A of the Taxes Act)” substitute “, in
accordance with Chapter 4 of Part 2 of the Finance Act 2012,”.
85    (1)
Section 212 (annual deemed disposal of holdings of unit trusts etc) is
amended as follows.
      (2)
In subsection (1), for “of an insurance company’s long-term insurance fund”
40
substitute “held by an insurance company for the purposes of its long-term
business”.
      (3)
Omit subsection (2).

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
377

      (4)
At the end insert—
“(9)
This section applies to an overseas life insurance company as if
references in subsection (1) to assets were to such of the assets
concerned as are UK assets.
(10)
Assets (whether situated in the United Kingdom or elsewhere) are
5
“UK assets” if, in accordance with the provision made by or under
Chapter 4 of Part 2 of CTA 2009, they fall to be attributed to the
permanent establishment in the United Kingdom through which the
company carries on life assurance business.”
86    (1)
Section 213 (spreading of gains and losses under section 212) is amended as
10
follows.
      (2)
In subsection (1A), for “(in accordance with section 432A of the Taxes Act)”
substitute “, in accordance with Chapter 4 of Part 2 of the Finance Act 2012,”.
      (3)
After subsection (4) insert—
“(4ZA)
Subsection (4) applies in relation to an overseas life insurance
15
company with the insertion after “long-term business” of the words
“in the United Kingdom through a permanent establishment”.”
87
After section 213 insert—
“213A
Power to modify ss.212 and 213 etc in case of CFCs that are offshore
funds
20
(1)
The Treasury may make regulations for the purpose mentioned in
subsection (2) in any case where—
(a)
an insurance company to which the I - E rules apply is
deemed to make a disposal under section 212 of an interest in
an offshore fund,
25
(b)
the offshore fund is a CFC, and
(c)
there is (or, but for the regulations, would be) a CFC charge
on the insurance company referable to its relevant interest in
the CFC for the accounting period in which the disposal is
deemed to have been made.
30
(2)
The regulations are to be made for the purpose of modifying the
operation of—
(a)
section 212 or 213,
(b)
the CFC rules, or
(c)
the I - E rules,
35

in relation to any accounting period of the insurance company so as
to reduce the charge to tax.
(3)
The regulations may—
(a)
make different provision for different cases or circumstances,
and
40
(b)
contain incidental, supplementary, consequential,
transitional, transitory or saving provision.
(4)
The provision that may be made as a result of subsection (3)(b)
includes provision modifying any other provision of the Corporation
Tax Acts.
45

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
378

(5)
In this section—
“CFC” and “CFC charge” have the same meanings as in Part 9A
of TIOPA 2010 (see section 371VA),
“the CFC rules” means the rules contained in that Part, and
“offshore fund” has the meaning given by section 355 of TIOPA
5
2010.”
88    (1)
Schedule 7AC (exemptions for disposals by companies with substantial
shareholdings) is amended as follows.
      (2)
In paragraph 6(1)(c), for “section 440(1) or (2) of the Taxes Act” substitute
“any of sections 116 to 118 of the Finance Act 2012”.
10
      (3)
Paragraph 17 is amended as follows.
      (4)
In sub-paragraph (2), for “of its long-term insurance fund” substitute “held
by it for the purposes of its long-term business”.
      (5)
In sub-paragraph (3)(b), for “of its long-term insurance fund” substitute “for
the purposes of its long-term business”.
15
      (6)
In sub-paragraph (4), for “as assets of its long-term insurance fund”
substitute “for the purposes of its long-term business”.
      (7)
In sub-paragraph (4A)—
(a)
for “of the investing company’s long-term insurance fund”
substitute “held by the investing company for the purposes of its
20
long-term business”,
(b)
for “as assets of its long-term insurance fund” substitute “for the
purposes of its long-term business”, and
(c)
for “a structural asset, or structural assets, within the meaning of
section 83XA of the Finance Act 1989” substitute “an asset or assets
25
which formed part of the long-term business fixed capital of the
company in question”.
      (8)
In the italic heading before that paragraph, for “insurance company’s long-
term insurance fund” substitute “insurance company held for the purposes of its
long-term business”.
30
89
In paragraph 1 of Schedule 7AD (gains of insurance company from venture
capital investment partnership), for “the assets of the long-term insurance
fund of an insurance company (“the company”)” substitute “the assets held
by an insurance company (“the company”) for the purposes of its long-term
business”.
35
Finance Act 1993
90
FA 1993 is amended as follows.
91
In section 91 (deemed disposals of unit trusts by insurance companies), omit
subsection (2).
Finance Act 1999
40
92
FA 1999 is amended as follows.
93
In section 81(8) (acquisitions disregarded under insurance companies
concession), in the definition of “insurance company”, for “meaning of

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
379

Chapter I of Part XII of the Taxes Act 1988” substitute “meaning given by
section 65 of the Finance Act 2012”.
Capital Allowances Act 2001
94
CAA 2001 is amended as follows.
95
In section 19(5) (special leasing of plant or machinery), for “life assurance
5
business” substitute “long-term business”.
96
In the italic heading before section 254, for “Life assurance” substitute “Long-
term”.
97
In section 254(1) (introductory), for “life assurance business” substitute
“long-term business”.
10
98
For section 255 substitute—
“255
Apportionment of allowances and charges
(1)
This section applies if the long-term business of the company
consists of—
(a)
basic life assurance and general annuity business, and
15
(b)
non-BLAGAB long-term business.
(2)
In that case—
(a)
any allowance to which the company is entitled for a
chargeable period in respect of a management asset, and
(b)
any charge to which it is liable for a chargeable period in
20
respect of a management asset,

must be apportioned between the businesses in accordance with
Chapter 7 of Part 2 of FA 2012.”
99    (1)
Section 256 (different giving effect rules for different categories of business)
is amended as follows.
25
      (2)
In subsection (1)(b)—
(a)
for “under the I minus E basis” substitute “in accordance with the I -
E rules”, and
(b)
for “its life assurance business” substitute “that business”.
      (3)
In subsection (2)(a), for the words from “as expenses payable” to “section
30
76(7) of ICTA” substitute “for the purposes of section 76 of FA 2012 as
deemed BLAGAB management expenses for the chargeable period in
question”.
      (4)
Omit subsections (3) and (4).
      (5)
In the heading, for “different categories of business” substitute
35
“BLAGAB”.
100
In section 257(2) (supplementary), for paragraphs (a) and (b) substitute—
“(a)
section 93(5) of FA 2012 (minimum profits test), or
(b)
section 103 of FA 2012 (rules for determining policyholders’
share of I - E profit).”
40
101   (1)
Section 261 (special leasing: life assurance business) is amended as follows.
      (2)
For “life assurance business” substitute “long-term business”.

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
380

      (3)
In the heading, for “life assurance business” substitute “long-term
business”.
102
In the heading for Chapter 1 of Part 12, for “LIFE ASSURANCE” substitute
“LONG-TERM”.
103   (1)
Section 544 (management assets) is amended as follows.
5
      (2)
In subsections (1) and (2), for “life assurance business” substitute “long-term
business”.
      (3)
Omit subsection (3).
104   (1)
Section 545 (investment assets) is amended as follows.
      (2)
In subsection (1), for “life assurance business” substitute “long-term
10
business”.
      (3)
For subsections (3) to (5) substitute—
“(3)
No allowance in respect of an investment asset is 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.”
15
105   (1)
Section 560 (transfer of insurance company business) is amended as follows.
      (2)
In subsection (1)(b)(ii), omit the words from “within” to the end.
      (3)
In subsection (5), after paragraph (d) insert—
“(e)
“qualifying overseas transfer” means so much of a transfer of
the whole or any part of the business of an overseas life
20
insurance company carried on through a permanent
establishment in the United Kingdom as takes place in
accordance with an authorisation granted outside the United
Kingdom for the purposes of Article 14 of the Council
Directive of 5 November 2002 concerning life assurance
25
(2002/83/EC).”
106   (1)
Schedule A1 (first-year tax credits) is amended as follows.
      (2)
In paragraph 7—
(a)
in sub-paragraph (2), for the words from “which is treated” to the
end substitute “which, as a result of section 87(3) of FA 2012, is
30
treated for the purposes of section 76 of that Act as a deemed
BLAGAB management expense for an accounting period”, and
(b)
in sub-paragraph (3), for “section 432AA” substitute “section 86” and
for “section 432AB(4)” substitute “section 87(4)”.
      (3)
In paragraph 9—
35
(a)
in sub-paragraph (1), for “life assurance business” substitute “basic
life assurance and general annuity business” and for “under the I
minus E basis” substitute “in accordance with the I - E rules”, and
(b)
in sub-paragraph (2), for “section 76(12) of ICTA” substitute “section
73 of FA 2012”.
40
      (4)
In paragraph 14—
(a)
in sub-paragraph (2), for “section 76(12) of ICTA” substitute “section
73 of FA 2012”,
(b)
in sub-paragraph (3), for “section 76(12)” substitute “section 73”,

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
381

(c)
in sub-paragraph (5), for “section 76(12) of ICTA” substitute “section
73 of FA 2012”, and
(d)
for sub-paragraph (6) substitute—
    “(6)
Disregard any amounts brought forward from an earlier
chargeable period which fall to be taken into account in
5
calculating for the purposes of section 73 of FA 2012 the
amount of adjusted BLAGAB management expenses of the
company for the period in question as a result of—
(a)
the previous application of section 73 or 93 of FA
2012, or
10
(b)
the carry forward to the period in question of an
amount under section 391(3) of CTA 2009 (loan
relationship deficit carried forward).”
      (5)
In paragraph 16—
(a)
in sub-paragraph (1), for “life assurance business” substitute “basic
15
life assurance and general annuity business” and for “under the I
minus E basis” substitute “in accordance with the I - E rules”, and
(b)
for sub-paragraph (3) substitute—
    “(3)
For this purpose, no account is to be taken of any amounts
brought forward from an earlier chargeable period which
20
fall to be taken into account in calculating for the purposes
of section 73 of FA 2012 the amount of adjusted BLAGAB
management expenses of the company for the period in
question as a result of—
(a)
the previous application of section 73 or 93 of FA
25
2012, or
(b)
the carry forward to the period in question of an
amount under section 391(3) of CTA 2009 (loan
relationship deficit carried forward).”
      (6)
In paragraph 21—
30
(a)
in sub-paragraph (1)(a), for the words from “treated” to the end
substitute “which, as a result of section 87(3) of FA 2012, is treated for
the purposes of section 76 of that Act as a deemed BLAGAB
management expense for the chargeable period”,
(b)
in sub-paragraph (1)(b), for “section 76(12) of that Act” substitute
35
“section 73 of FA 2012”, and
(c)
in sub-paragraph (2), for “section 76(12) of ICTA” substitute “section
73 of FA 2012”.
      (7)
In paragraph 22—
(a)
in sub-paragraph (1), for “life assurance business” substitute “basic
40
life assurance and general annuity business” and for “under the I
minus E basis” substitute “in accordance with the I - E rules”, and
(b)
for sub-paragraph (2) substitute—
    “(2)
For the purposes of those rules, the total amount which
may—
45
(a)
be carried forward under section 73 of FA 2012
from a chargeable period in which the company
claims a first-year tax credit, and

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
382

(b)
be brought into account for the next chargeable
period in accordance with step 5 in section 76 of FA
2012,

is treated as reduced by the amount of the loss
surrendered.”
5
107   (1)
Part 2 of Schedule 1 (index of defined expressions) is amended as follows.
      (2)
Omit the entry for “life assurance business”.
      (3)
Insert the following entries at the appropriate places—

“basic life assurance and general
sections 57 and 67(5) of FA

annuity business
2012 (as applied by section

10

141(2) of that Act)”

“I - E rules
section 70(1) and (2) of FA 2012

(as applied by section 141(2) of

that Act)”

“insurance company
section 65 of FA 2012 (as

15

applied by section 141(2) of

that Act)”

“long-term business
section 63(1) of FA 2012 (as

applied by section 141(2) of

that Act)”

20

“non-BLAGAB long-term business
sections 66 and 67 of FA 2012

(as applied by section 141(2) of

that Act)”

Finance Act 2003
108
FA 2003 is amended as follows.
25
109
Omit section 156 (overseas life insurance companies).
Income Tax (Earnings and Pensions) Act 2003
110
ITEPA 2003 is amended as follows.
111
In section 357(3) (business entertainment and gifts: exception where
employer’s expenses disallowed), for paragraph (b) substitute—
30
“(b)
the ordinary BLAGAB management expenses of the
employer for the purposes of section 76 of FA 2012.”