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
397

210   (1)
Section 1297 (life assurance business) is amended as follows.
      (2)
In subsection (1), for “section 76 of ICTA applies (expenses of companies
carrying on life assurance business)” substitute “the I - E rules apply”.
      (3)
In subsection (2), for “section 86 of FA 1989” substitute “section 79 of FA
2012”.
5
      (4)
In subsection (4)—
(a)
for “purposes of section 86 of FA 1989” substitute “purpose of
calculating the adjusted BLAGAB management expenses of the
company for the purposes of section 73 of FA 2012”, and
(b)
for “payable for that period which fall to be included at Step 1 in
10
section 76(7) of ICTA” substitute “debited, in accordance with
generally accepted accounting practice, in the accounts drawn up by
the company for that period”.
      (5)
In subsection (5)(a), for “an amount being brought into account under
section 76 of ICTA as expenses payable” substitute “an amount constituting
15
ordinary BLAGAB management expenses of the company for the purposes
of section 76 of FA 2012”.
      (6)
For the heading substitute “Basic life assurance and general annuity
business”.
211
In section 1298(2) (business entertainment and gifts), for paragraph (c)
20
substitute—
“(c)
expenses to which this section applies are not to be regarded
as constituting ordinary BLAGAB management expenses of
the company for the purposes of section 76 of FA 2012.”
212
In section 1304 (crime-related payments), for subsection (3) substitute—
25
“(3)
Expenses to which subsection (4) or (5) applies are not to be regarded
as constituting ordinary BLAGAB management expenses of a
company for the purposes of section 76 of FA 2012.”
213   (1)
Schedule 2 (transitionals and savings) is amended as follows.
      (2)
In paragraph 139—
30
(a)
in sub-paragraph (3), for the words from “Section 76ZE” to “section
75)” substitute “Section 81(4) of FA 2012 (which, in the case of
companies carrying on basic life assurance and general annuity
business, applies section 75(2) to (4))”,
(b)
in that sub-paragraph, for “condition in subsection (1) of that
35
section” substitute “conditions in paragraphs (a) and (b) of that
subsection”, and
(c)
in sub-paragraph (4), for “and section 76ZE of ICTA” substitute
“(including as applied by section 81(4) of FA 2012)”.
      (3)
In paragraph 140(1)(b), for “section 76ZL of ICTA” substitute “the
40
application by section 82 of FA 2012 of section 1249(1) to (3) of this Act”.
214
In Schedule 4 (index of defined expressions)—
(a)
in the entry for “basic life assurance and general annuity business”,
for “section 431F of ICTA (as applied by section 431(2) of that Act)”
substitute “sections 57 and 67(5) of FA 2012 (as applied by section
45
141(2) of that Act)”,

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
398

(b)
omit the entry for “deposit back arrangements”,
(c)
omit the entry for “gross roll-up business”,
(d)
in the entry for “the I minus E basis”, for “I minus E basis” substitute
“I - E rules” and for “section 431(2) of ICTA” substitute “section 70(1)
and (2) of FA 2012 (as applied by section 141(2) of that Act)”,
5
(e)
in the entry for “insurance business transfer scheme”, for “section
431(2) of ICTA” substitute “section 139(1) of FA 2012 (as applied by
section 141(2) of that Act)”,
(f)
in the entry for “insurance company”, for “section 431(2) of ICTA”
substitute “section 65 of FA 2012 (as applied by section 141(2) of that
10
Act)”,
(g)
omit the entry for “the Insurance Prudential Sourcebook”,
(h)
in the entry for “life assurance business”, for “section 431(2) of ICTA”
substitute “section 56 of FA 2012 (as applied by section 141(2) of that
Act)”,
15
(i)
omit the entry for “linked assets”,
(j)
in the entry for “long-term business”, for “section 431(2) of ICTA”
substitute “section 63 of FA 2012 (as applied by section 141(2) of that
Act)”,
(k)
omit the entry for “long-term insurance fund”,
20
(l)
in the entry for “overseas life insurance company”, for “section 431(2)
of ICTA” substitute “section 139(1) of FA 2012 (as applied by section
141(2) of that Act)”, and
(m)
omit the entry for “qualifying overseas transfer”.
Corporation Tax Act 2010
25
215
CTA 2010 is amended as follows.
216
In section 17(3) (interpretation of Chapter: meaning of “carried-forward
amount”)—
(a)
in paragraph (f), for “section 76(12) or (13) of ICTA (certain expenses
of insurance companies)” substitute “section 73 or 93 of FA 2012 for
30
use at step 5 in section 76 of that Act (the I - E basis for insurance
companies)”, and
(b)
omit paragraph (g).
217
In section 54(2) (non-UK resident company: receipts of interest, dividends or
royalties), for the words from “any of these provisions—” to the end
35
substitute “section 37 or 45”.
218
In Chapter 4 of Part 4 (property losses), after section 67A insert—
“Insurance companies
67B
Exclusion in the case of property businesses of insurance companies
(1)
This Chapter does not apply for the purpose of applying the I - E
40
rules in relation to a loss made by an insurance company in any of its
separate UK property businesses or overseas property businesses
within section 86(4) of FA 2012.

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
399

(2)
But in the case of a loss which is referable, in accordance with
Chapter 4 of Part 2 of that Act, to the company’s basic life assurance
and general annuity business, see section 87(3) and (4) of that Act.”
219
In section 606(5) (groups), in the definition of “insurance company”, for
“section 431(2) of ICTA” substitute “section 65 of FA 2012”.
5
220   (1)
Section 783 (treatment of payer of manufactured dividend) is amended as
follows.
      (2)
In subsection (6), for the words from “as if” to the end substitute “for the
purposes of section 76 of FA 2012 as a deemed BLAGAB management
expense for the accounting period in which it is paid.”
10
      (3)
In subsection (7)—
(a)
in paragraph (a), for “under section 432A of ICTA” substitute “in
accordance with Chapter 4 of Part 2 of FA 2012”, and
(b)
in paragraph (b), for “under section 432A of ICTA” substitute “in
accordance with that Chapter”.
15
221   (1)
Section 785 (treatment of payer: REITs) is amended as follows.
      (2)
In subsection (4), for the words from “as if” to the end substitute “for the
purposes of section 76 of FA 2012 as a deemed BLAGAB management
expense for the accounting period in which it is paid.”
      (3)
In subsection (5)(b), for “under section 432A of ICTA” substitute “in
20
accordance with Chapter 4 of Part 2 of FA 2012”.
222   (1)
Section 791 (treatment of payer of manufactured overseas dividend) is
amended as follows.
      (2)
In subsection (6), for the words from “as if” to the end substitute “for the
purposes of section 76 of FA 2012 as a deemed BLAGAB management
25
expense for the accounting period in which it is paid.”
      (3)
In subsection (7)—
(a)
in paragraph (a), for “under section 432A of ICTA” substitute “in
accordance with Chapter 4 of Part 2 of FA 2012”, and
(b)
in paragraph (b), for “under section 432A of ICTA” substitute “in
30
accordance with that Chapter”.
223
In section 799(5) (manufactured payments under arrangements with
unallowable purpose), for paragraph (a) substitute—
“(a)
section 77(4)(e) or (f) of FA 2012 (ordinary BLAGAB
management expenses: excluded amounts),”.
35
224
In section 835(2) (transferor or associate becomes liable for payment of rent),
for paragraph (c) substitute—
“(c)
a deduction is allowed for the payment by taking it into
account in the calculation at step 1 of section 76 of FA 2012
(management expenses of insurance companies carrying on
40
basic life assurance and general annuity business).”
225
In section 836(2) (transferor or associate becomes liable for payment other
than rent), for paragraph (c) substitute—
“(c)
a deduction is allowed for the payment by taking it into
account in the calculation at step 1 of section 76 of FA 2012
45

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
400

(management expenses of insurance companies carrying on
basic life assurance and general annuity business).”
226   (1)
Section 839 (deduction under section 76 of ICTA not to exceed commercial
rent) is amended as follows.
      (2)
In subsection (1), for “the deduction under section 76 of ICTA allowed for”
5
substitute “the amount to be taken into account as mentioned in section
835(2)(c) or 836(2)(c) in respect of”.
      (3)
In subsection (3), for “The deduction” substitute “The amount of the
payment to be taken into account”.
      (4)
In the heading, omit “under section 76 of ICTA”.
10
227   (1)
Section 840 (carrying forward parts of payments) is amended as follows.
      (2)
In subsection (2), for “allowed as a deduction under section 76 of ICTA is not
allowed” substitute “taken into account as mentioned in section 835(2)(c) or
836(2)(c) is not taken into account”.
      (3)
In subsection (4), for “a deduction under section 76 of ICTA” substitute “the
15
calculation at step 1 of section 76 of FA 2012”.
      (4)
In subsection (5), for “allowed as a deduction under section 76 of ICTA”
substitute “taken into account in the calculation at step 1 of section 76 of FA
2012”.
228
In section 860 (relevant corporation tax relief), for paragraph (d) (but not the
20
“and” at the end of that paragraph) substitute—
“(d)
a deduction of an amount which for the purposes of section
73 of FA 2012 is an amount of adjusted BLAGAB
management expenses of an insurance company for an
accounting period,”.
25
229
In section 886 (relevant tax relief), for paragraph (c) substitute—
“(c)
a deduction of an amount which for the purposes of section
73 of FA 2012 is an amount of adjusted BLAGAB
management expenses of an insurance company for an
accounting period,”.
30
230
In section 1171(2) (powers under orders and regulations excluded from
general provision)—
(a)
omit the “and” before paragraph (g), and
(b)
after that paragraph insert “, and
(h)
Parts 2 and 3 of FA 2012.”
35
231
In section 1173(2) (miscellaneous charges), in Part 3 of the table, omit—
(a)
the entry relating to section 436A(1) of ICTA,
(b)
the entry relating to section 442A(1) of ICTA,
(c)
the entry relating to section 85(1) of FA 1989, and
(d)
the entry relating to section 85A(1) of FA 1989.
40
Taxation (International and Other Provisions) Act 2010
232
TIOPA 2010 is amended as follows.

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
401

233
In section 43(7) (profits attributable to permanent establishments for
purposes of section 42(2)), omit “(within the meaning given by section 431(2)
of ICTA)”.
234
In section 72(2) (application of section 73(1)), omit paragraph (b) (together
with the “or” before it).
5
235
In section 96(1) (companies with overseas branches: restriction of credit)—
(a)
omit “or section 436A of ICTA”,
(b)
omit “, calculated in accordance with the provisions applicable for
the purposes of section 35 of CTA 2009,” and
(c)
for “life assurance business or gross roll-up business” substitute
10
“non-BLAGAB long-term business”.
236
For section 97 substitute—
“97
Companies with more than one category of business: restriction of
credit
(1)
This section applies if—
15
(a)
an insurance company carries on more than one category of
long-term business in an accounting period, and
(b)
there arises to the company in that period any income or gain
(“the relevant income”) in respect of which credit for foreign
tax is to be allowed under the arrangements.
20
(2)
The amount of the credit for foreign tax which, under the
arrangements, is allowable against corporation tax in respect of so
much of the relevant income as is referable, in accordance with Part
2 of FA 2012, to a particular category of business must not exceed the
fraction of the foreign tax which, in accordance with subsection (3),
25
is attributable to that category of business.
(3)
The fraction of the foreign tax that is attributable to the category of
business in question is the fraction given by—

RPRI

TRI


where—
RPRI is the amount of the relevant income referable to the
30
category of business in question in accordance with section
97A, and
TRI is the total amount of the relevant income.
97A
Commercial allocation of relevant income to different categories of
long-term business
35
(1)
The amount of the relevant income that, for the purposes of section
97, is to be regarded as referable to a category of business is to be
determined in accordance with an acceptable commercial method
adopted by the company for the period of account in which the
relevant income arises.
40
(2)
A method is an “acceptable commercial method” if, in all the
circumstances, it can reasonably be regarded as providing a fair
method for the purposes of section 97 for determining for a period of

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
402

account the amount of any income or gain arising in the period that
is referable to a particular category of long-term business carried on
by the company.
(3)
The Treasury may make regulations for the purposes of this
section—
5
(a)
prescribing cases in which a method is, or is not, to be
regarded as an acceptable commercial method, and
(b)
prescribing cases in which the only acceptable commercial
method is to be a method prescribed, or of a description
prescribed, in the regulations.
10
(4)
Subject to any provision made by regulations under subsection (3),
the method adopted for the purposes of this section for a period of
account must be consistent with the method adopted for the
purposes of section 98 or 115 of FA 2012 for that period.”
237
Omit section 98 (attribution for section 97 purposes if category is gross roll-
15
up business).
238
In section 99(7) (allocation of expense etc in calculations under section 35 of
CTA 2009), for “98” substitute “97A”.
239
Omit section 102 (interpreting sections 99 to 101 for life assurance or gross
roll-up business).
20
240   (1)
Section 103 (interpreting sections 99 to 101 for other insurance business) is
amended as follows.
      (2)
In subsection (1), omit the words from “if” to the end.
      (3)
In the heading, omit “for other insurance business”.
241
In section 104(3) (interpreting sections 100 and 101: amounts referable to
25
category of business), for “98” substitute “97A”.
242
In section 269(6) (insurance activities and insurance-related activities), in the
definition of “contract of insurance”, for “has the same meaning as in
Chapter 1 of Part 12 of ICTA” substitute “has the meaning given by section
64 of FA 2012”.
30
243
In section 310(2) (meaning of “carried-forward amount”)—
(a)
in paragraph (a), for “section 76(12) or (13) of ICTA (certain expenses
of insurance companies)” substitute “section 73 or 93 of FA 2012 for
use at step 5 in section 76 of that Act (the I - E basis for insurance
companies)”, and
35
(b)
omit paragraph (b).
244
In Part 1 of Schedule 11 (index of defined expressions used in Parts 2 and 3
of Act), insert the following entries at the appropriate places—

“insurance company
section 65 of FA 2012 (as

applied by section 141(2) of

40

that Act)”

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 4 — Consequential repeals
403

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

applied by section 141(2) of

that Act)”

Finance Act 2011
245
FA 2011 is amended as follows.
5
246
In paragraph 73(2) of Schedule 19 (bank levy: meaning of “excluded entity”),
for “meaning given by section 431(2) of ICTA” substitute “meanings given
by sections 65 and 139 of FA 2012 respectively”.
Part 4
Consequential repeals
10
247
In consequence of the amendments made by Parts 1 to 3 of this Schedule (or
previous amendments made by other enactments), omit the following
provisions—
(a)
in FA 1989—
(i)
section 84(4), and
15
(ii)
Schedule 8,
(b)
in FA 1990—
(i)
sections 41 and 42,
(ii)
section 45(1) to (7) and (9) to (11),
(iii)
section 48,
20
(iv)
paragraphs 1, 4 and 8 of Schedule 6,
(v)
Schedule 7, and
(vi)
paragraphs 4 and 7 of Schedule 9,
(c)
in FA 1991—
(i)
paragraphs 5 and 12 of Schedule 7, and
25
(ii)
paragraph 15 of Schedule 15,
(d)
in TCGA 1992, paragraph 14(22) to (24) of Schedule 10,
(e)
in FA 1993, section 103(1) and (3),
(f)
in FA 1995—
(i)
section 51,
30
(ii)
Schedule 8, and
(iii)
paragraph 1 of Schedule 9,
(g)
in FA 1996—
(i)
section 163,
(ii)
section 167(3) and (10),
35
(iii)
section 168(2),
(iv)
paragraph 23 of Schedule 14,
(v)
Schedule 31, and
(vi)
Schedule 33,
(h)
in FA 1997, section 67,
40
(i)
in FA 1998—
(i)
section 123(5)(a), and