Finance Bill

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 17 — Part 2: transitional provision
Part 2 — Specific transitional provisions
418

      (3)
In this paragraph “section 440A securities” has the same meaning as in
section 210B of TCGA 1992.
Carry-forward of trading losses and excess management expenses
29    (1)
Any unused losses arising to an insurance company in an accounting period
ending before 1 January 2013 from gross roll-up business may be relieved in
5
subsequent accounting periods in accordance with section 45 of CTA 2010
(carry forward of trade loss against subsequent trade profits) as if they were
losses that had arisen from non-BLAGAB long-term business.
      (2)
For this purpose a loss is “unused” so far as no relief has been given for it
under—
10
(a)
section 436A of ICTA (including as applied by any provision of Part
2 of Schedule 7 to FA 2007), or
(b)
any other provision of the Corporation Tax Acts.
30    (1)
Any unused losses arising to an insurance company in an accounting period
ending before 1 January 2013 from PHI business may be relieved in
15
subsequent accounting periods in accordance with section 45 of CTA 2010 as
if they were losses that had arisen from non-BLAGAB long-term business.
      (2)
For this purpose a loss is “unused” so far as, but for this Part of this Act, it
would have been available for carry forward under section 45 of CTA 2010
for use in relation to profits of the PHI business for subsequent accounting
20
periods.
31    (1)
The appropriate part of any unused life assurance trade losses arising to an
insurance company in an accounting period ending before 1 January 2013 is
to be treated for the purposes of section 124 as if it were the unrelieved loss
available for relief in subsequent accounting periods in accordance with that
25
section.
      (2)
A “life assurance trade loss” means a loss arising to an insurance company
from life assurance business which is calculated in accordance with the life
assurance trade profits provisions.
      (3)
A life assurance trade loss is “unused” so far as no relief is given for it
30
under—
(a)
section 85A or 89 of FA 1989, or
(b)
any other provision of the Corporation Tax Acts.
      (4)
The “appropriate” part of any unused life assurance trade losses is the
amount (if any) by which—
35
(a)
the amount of the unused life assurance trade losses, exceeds
(b)
the amount of unused losses arising to an insurance company in an
accounting period ending before 1 January 2013 from gross roll-up
business (with the definition of “unused” in paragraph 29(2)
applying here).
40
32    (1)
This paragraph applies if, but for this Part of this Act, an amount would have
been carried forward to an accounting period of an insurance company
under section 76(12) or (13) of ICTA (expenses of insurance companies).
      (2)
The amount is to be treated for the purposes of step 5 of section 76 as an
expense from a previous accounting period carried forward as a result of
45

Finance Bill
Schedule 17 — Part 2: transitional provision
Part 2 — Specific transitional provisions
419

section 73 to the accounting period of the company beginning on 1 January
2013.
33    (1)
This paragraph applies if, but for this Part of this Act, any amount of
expenses would, as a result of section 86(8) and (9) of FA 1989 (relief for
fraction of acquisition expenses for earlier accounting periods), have been
5
relieved in an accounting period of an insurance company beginning on or
after 1 January 2013.
      (2)
Relief is to continue to be given for the expenses in question as follows—
(a)
the amount of the relief for each accounting period is to be
determined in accordance with section 86(8) and (9) of FA 1989
10
(despite their repeal by this Part of this Act), and
(b)
the relief is to be given by treating the amount of the expenses as
deemed BLAGAB management expenses for the accounting periods
in question for the purposes of section 76.
      (3)
But relief is not to be given as a result of sub-paragraph (2) for any expenses
15
for any accounting period (“the period concerned”) if the expenses are
reversed in the period concerned or any preceding accounting period.
Relief for BLAGAB trade losses for accounting period beginning on or after 1 January 2013
34    (1)
This paragraph applies if—
(a)
an insurance company carries on basic life assurance and general
20
annuity business in an accounting period beginning on or after 1
January 2013, and
(b)
the company has a BLAGAB trade loss for the accounting period.
      (2)
For the purposes of section 37(6) of CTA 2010 (as applied by section 123) the
company is to be treated as carrying on that business in a previous
25
accounting period if the company carried on life assurance business in that
period.
Assets of the shareholder fund
35    (1)
This paragraph applies in relation to assets of an insurance company
carrying on life assurance business which were assets of the shareholder
30
fund of the company for the period of account ending immediately before 1
January 2013.
      (2)
Those assets are, in relation to times on or after that date, to be regarded for
the purposes of this Part as assets forming part of the long-term business
fixed capital of the company (whether or not they would otherwise be so
35
regarded).
      (3)
An asset is an “asset of the shareholder fund of an insurance company for the
period of account ending immediately before 1 January 2013” if it is shown
in any of lines 11 to 102 of Form 13 in the company’s periodical return
ending immediately before that date in respect of assets other than those of
40
its long-term business.
      (4)
But an asset is not to be regarded as an asset of the shareholder fund for that
period of account if for any accounting period ending before 1 January
2013—
(a)
income arising from the asset was, or chargeable gains or allowable
45
losses accruing on any part disposal of the asset for the purposes of

Finance Bill
Schedule 17 — Part 2: transitional provision
Part 3 — Supplementary
420

TCGA 1992 were, taken into account for the purposes of the charge
to corporation tax on the I minus E basis, or
(b)
income arising from the asset was taken into account in calculating
the profits of the company in respect of its life assurance business in
accordance with the provisions applicable for the purposes of the
5
taxation of such profits under section 35 of CTA 2009 (charge on
trade profits).
Part 3
Supplementary
General transitional provision in relation to provisions re-enacted in Part 2 of this Act
10
36    (1)
This paragraph applies where any provision of this Part of this Act re-enacts
(with or without modification) an enactment repealed by this Part of this
Act.
      (2)
The repeal and re-enactment does not affect the continuity of the law.
      (3)
Any subordinate legislation or other thing which—
15
(a)
has been made or done, or has effect as if made or done, under or for
the purposes of the repealed provision, and
(b)
is in force or effective in relation to accounting periods of insurance
companies ending on 31 December 2012,

has effect in relation to subsequent accounting periods of insurance
20
companies as if made or done under or for the purposes of the
corresponding provision of this Part of this Act.
      (4)
Any reference (express or implied) in any enactment, instrument or
document to a provision of this Part of this Act is to be read as including, in
relation to times, circumstances or purposes in relation to which the
25
corresponding repealed provision had effect, a reference to that
corresponding provision.

This sub-paragraph applies only so far as the context permits.
      (5)
Any reference (express or implied) in any enactment, instrument or
document to a repealed provision is to be read, in relation to times,
30
circumstances or purposes in relation to which the corresponding provision
of this Part of this Act has effect, as a reference or (as the context may require)
as including a reference to that corresponding provision.

This sub-paragraph applies only so far as the context permits.
      (6)
This paragraph is subject to any specific transitional, transitory or saving
35
provision made by or under this Schedule.
      (7)
The generality of this paragraph is not to be affected by specific transitional,
transitory or saving provision made by or under this Schedule.
      (8)
This paragraph has effect instead of section 17(2) of the Interpretation Act
1978.
40

Finance Bill
Schedule 18 — Part 3: consequential amendments
421

Power to make supplementary transitional provision etc
37    (1)
The Treasury may by regulations make further transitional, transitory or
saving provision in connection with the coming into force of any of the
provisions of this Part of this Act.
      (2)
The provision that may be made by the regulations includes provision
5
(whether by way of textual amendment or otherwise) altering or
supplementing the effect of any provision made by or under this Schedule.
      (3)
The regulations may be made so as to have effect in relation to any period
beginning before but ending on or after the day on which the regulations are
made (as well as in relation to periods no part of which falls before that day).
10
38
Any regulations made by the Treasury under any provision of this Schedule
may—
(a)
make different provision for different cases or circumstances, and
(b)
contain incidental, supplementary, consequential, transitional,
transitory or saving provision.
15
Interpretation
39
The following expressions have the same meaning in this Schedule as they
have in Chapter 1 of Part 12 of ICTA—
“brought into account” (except in paragraph 24),
“gross roll-up business”,
20
“the I minus E basis”,
“the life assurance trade profits provisions”,
“non-profit fund”,
“period of account”,
“periodical return”, and
25
“PHI business”.
Schedule 18
Section 176

Part 3: consequential amendments
Income and Corporation Taxes Act 1988
1
ICTA is amended as follows.
30
2
Omit section 459 (unregistered friendly societies: exemption from tax).
3
Omit section 460 (exemption from tax in respect of life or endowment
business).
4
Omit section 461 (taxation in respect of other business).
5
Omit sections 461A to 461C (taxation in respect of other business:
35
incorporated friendly societies qualifying for exemption).
6
Omit section 461D (transfers of business).
7
Omit section 462 (conditions for tax exempt business).

Finance Bill
Schedule 18 — Part 3: consequential amendments
422

8
Omit section 463 (long-term business of friendly societies: application of
Corporation Tax Acts).
9
Omit section 464 (maximum benefits payable to members).
10
Omit section 465 (old societies).
11
Omit section 465A (assets of branch of registered friendly society to be
5
treated as assets of society after incorporation).
12
Omit section 466 (interpretation of Chapter 2 of Part 12).
13    (1)
Schedule 15 (qualifying policies) is amended as follows.
      (2)
In paragraph 3—
(a)
in sub-paragraphs (1) and (4)(c), for “tax exempt life or endowment
10
business” substitute “exempt BLAGAB or eligible PHI business”,
(b)
in sub-paragraph (8)(b)(i), for “a new society” substitute “a society
other than an old society”, and
(c)
in sub-paragraph (8)(b)(ii), for “a society other than a new society”
substitute “an old society”.
15
      (3)
In paragraph 4(3)(b)(ii), for “a new society” substitute “a society other than
an old society”.
      (4)
Omit paragraph 5.
      (5)
In paragraph 6—
(a)
in sub-paragraph (1)—
20
(i)
omit “(as defined in section 466)” in both places, and
(ii)
for “tax exempt life or endowment business” substitute
“exempt BLAGAB or eligible PHI business”, and
(b)
in sub-paragraph (2), for “section 464” substitute “section 160 of the
Finance Act 2012”.
25
      (6)
After paragraph 6 insert—
“6A
Any expression—
(a)
which is used in any provision made by any of paragraphs
3 to 6, and
(b)
which is used in Part 3 of the Finance Act 2012,
30

has the same meaning in that provision as it has in that Part.”
Taxation of Chargeable Gains Act 1992
14
TCGA 1992 is amended as follows.
15
In section 100(2B)(b) (exemption for authorised unit trusts etc), for “section
466(2) of the Taxes Act” substitute “section 172 of the Finance Act 2012”.
35
16
In section 171(5) (transfers within a group: general provisions), for “section
461B of the Taxes Act” substitute “section 165 of the Finance Act 2012”.
Income Tax (Trading and Other Income) Act 2005
17
ITTOIA 2005 is amended as follows.

Finance Bill
Schedule 18 — Part 3: consequential amendments
423

18    (1)
Section 531 (gains from contracts for life insurance etc: cases where income
tax not treated as paid) is amended as follows.
      (2)
In subsection (3)(a), for “tax exempt life or endowment business” substitute
“exempt BLAGAB or eligible PHI business”.
      (3)
In subsection (4), for the definition of “tax exempt life or endowment
5
business” substitute—
““exempt BLAGAB or eligible PHI business” has the same
meaning as in Part 3 of FA 2012 (see sections 154 and 155).”
Corporation Tax Act 2009
19
CTA 2009 is amended as follows.
10
20
In section A1(2) (overview of the Corporation Tax Acts), after paragraph (k)
(as inserted by paragraph 136(b) of Schedule 16 to this Act) insert “, and
(l)
Part 3 of that Act (friendly societies carrying on long-term
business).”
21
In section 564(1) (section 563: interpretation), for “section 460 of ICTA”
15
substitute “section 158 of FA 2012”.
22
In section 931S(3) (company distributions: meaning of “small company”), in
the definition of “friendly society”, for “section 466(2) of ICTA” substitute
“section 172 of FA 2012”.
Consequential repeals
20
23
In consequence of the amendments made by this Schedule, omit the
following provisions—
(a)
in FA 1990—
(i)
section 49(1) to (4),
(ii)
section 50, and
25
(iii)
paragraph 6 of Schedule 9,
(b)
in FA 1991, paragraphs 1 to 3 of Schedule 9,
(c)
in FA 1995, paragraphs 1 and 2 of Schedule 10,
(d)
in FA 1996, section 171,
(e)
in FA 2007—
30
(i)
section 44,
(ii)
paragraphs 40 and 43 of Schedule 7, and
(iii)
Schedule 12, and
(f)
in FA 2008—
(i)
section 44, and
35
(ii)
Schedule 18.