|
| |
|
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. |
| |
| |
| 5 |
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 |
| 10 |
expenses for the next six accounting periods). |
| |
| |
| |
Calculate the total amount of any deemed BLAGAB management expenses for |
| |
the accounting period (see section 78(3)). |
| 15 |
For this purpose ignore any amounts that have already been included in step 1. |
| |
| |
| |
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 |
| 20 |
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)). |
| |
| 25 |
| |
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, |
| 30 |
the basic amount adjusted in accordance with step 4. |
| |
The resulting amount is the amount of adjusted BLAGAB management |
| |
expenses of the company for the accounting period. |
| |
77 | Section 76: meaning of “ordinary BLAGAB management expenses” etc |
| |
(1) | This section explains for the purposes of section 76 what is meant by the |
| 35 |
“ordinary BLAGAB management expenses of the company referable to the |
| |
| |
(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 |
| 40 |
(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)). |
| 45 |
(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 |
| |
| |
(4) | The following are “excluded amounts”— |
| |
(a) | amounts of a capital nature, |
| |
(b) | re-insurance premiums, |
| 5 |
| |
(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, |
| 10 |
(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- |
| 15 |
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 |
| 20 |
| |
(b) | amounts payable to the personal representatives of a deceased person |
| |
who was (or acted on behalf of a person who was) within that |
| |
| |
(7) | Amounts payable as mentioned in subsection (4)(g) do not include amounts |
| 25 |
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 |
| 30 |
| |
(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 |
| |
| 35 |
78 | Section 76: meaning of other expressions |
| |
(1) | This section explains for the purposes of section 76 what is meant by— |
| |
| |
“deemed BLAGAB management expenses for the accounting period”, |
| |
“expenses reversed in the accounting period”, and |
| 40 |
“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 |
| 45 |
|
| |
|
| |
|
(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 |
| |
| |
(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— |
| 5 |
section 79 or paragraph 33(2) of Schedule 17 (spreading of acquisition |
| |
| |
section 83 (general annuity business), |
| |
section 87(3) (losses from property businesses where land held for |
| |
purposes of long-term business), |
| 10 |
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 |
| 15 |
consisting of management asset), |
| |
section 391(3) of CTA 2009 (loan relationships: carry forward of surplus to |
| |
| |
section 1080(2) of CTA 2009 (additional relief for expenditure on research |
| |
| 20 |
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 |
| |
| 25 |
(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 |
| 30 |
| |
(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. |
| |
79 | Spreading of acquisition expenses |
| 35 |
(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 |
| |
| |
(2) | In the case of the acquisition expenses— |
| 40 |
(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 |
| 45 |
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 |
| |
| |
(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 |
| 5 |
(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 |
| |
| |
(5) | One-seventh of the adjusted amount of the acquisition expenses is treated for |
| 10 |
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 |
| 15 |
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 |
| 20 |
| |
(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. |
| |
80 | Section 79: meaning of “acquisition expenses” |
| 25 |
(1) | This section explains for the purposes of section 79 what is meant by |
| |
| |
(2) | The following are “acquisition expenses”— |
| |
(a) | commissions (however described) other than commissions for persons |
| |
who collect premiums from house to house, |
| 30 |
(b) | any other expenses payable solely for the purpose of the acquisition of |
| |
| |
(c) | so much of any other expenses payable partly for that purpose, and |
| |
partly for other purposes, as are properly attributable to the acquisition |
| |
| 35 |
(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 |
| 40 |
respect of a policy of insurance issued in respect of an insurance |
| |
| |
(b) | the securing of the payment of increased or additional consideration in |
| |
respect of an annuity contract already made. |
| |
|
| |
|