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81 | Amounts treated as ordinary BLAGAB management expenses |
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(1) | This section applies in relation to amounts which meet the conditions in section |
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(2) | The relevant permissive rules apply for the purpose of treating the amounts as |
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ordinary BLAGAB management expenses for the purposes of section 76 as |
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they apply for the purpose of treating amounts as expenses of management for |
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the purposes of Chapter 2 of Part 16 of CTA 2009 (companies with investment |
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(3) | The following provisions of CTA 2009 are “relevant permissive rules”— |
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(a) | section 1000 (costs of setting up employee share ownership trust), |
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(b) | section 1234 (payments for restrictive undertakings), |
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(c) | section 1235 (employees seconded to charities and educational |
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(d) | section 1237 (counselling and other outplacement expenses), |
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(e) | section 1238(1) to (3) (retraining courses), |
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(f) | sections 1239 to 1242 (redundancy payments and approved contractual |
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(g) | section 1243 (payments made by the Government), and |
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(h) | section 1244 (contributions to local enterprise organisations or urban |
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(a) | an employer’s liability to corporation tax for an accounting period is |
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determined on the assumption that a deduction for expenditure is |
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allowed as a result of the application by this section of section 1238(1) |
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(b) | the deduction would not otherwise have been allowed, |
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| section 75(2) to (4) of CTA 2009 (retraining courses: recovery of tax) apply. |
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(a) | an amount is treated as an ordinary BLAGAB management expense as |
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a result of the application by this section of section 1242 of CTA 2009, |
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(b) | the amount would otherwise be regarded as an acquisition expense for |
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the purposes of section 79, |
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| the expense is not to be so regarded. |
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(6) | Section 1253 of CTA 2009 (contributions to local enterprise organisations or |
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urban regeneration companies: disqualifying benefits) applies in the case of |
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amounts treated, as a result of the application by this section of section 1244 of |
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that Act, as ordinary BLAGAB management expenses as it applies in the case |
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of amounts for which a deduction has been made under section 1219 of that Act |
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as a result of section 1244 of that Act. |
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(7) | For the purposes of this section— |
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(a) | references in any relevant permissive rule to a company carrying on |
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business that consists wholly or partly of making investments or to a |
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company with investment business are to be read as references to a |
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company carrying on basic life assurance and general annuity business, |
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(b) | references in any relevant permissive rule to an amount being |
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deductible under section 1219 of CTA 2009 are to be read as references |
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to an amount being deductible as an ordinary BLAGAB management |
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(c) | section 1239 of CTA 2009 is to be treated as having effect with the |
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omission of subsection (1)(c), |
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(d) | the reference in section 1240(4) of CTA 2009 to sections 1224 to 1227 of |
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that Act is to be read as a reference to section 77(8) and (9) of this Act, |
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(e) | section 1243 of CTA 2009 is to be treated as having effect with the |
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omission of subsection (1)(c). |
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(8) | An amount is treated as an ordinary BLAGAB management expense as a result |
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of this section only so far as it would not otherwise be regarded as an ordinary |
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BLAGAB management expense. |
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82 | Restrictions in relation to ordinary BLAGAB management expenses |
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(1) | This section applies in relation to an amount which is (or, but for this section, |
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would be) regarded for the purposes of section 76 as an ordinary BLAGAB |
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management expense of an insurance company. |
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(2) | Section 1249(1) and (2) of CTA 2009 (unpaid remuneration) apply for the |
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purpose of determining the period of account for which the amount is debited |
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in the accounts of the company for the purposes of section 77; but this |
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subsection is subject to the operation of section 79. |
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(3) | Section 1249(1) and (3) of CTA 2009 apply for the purpose of determining |
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whether the amount is to be regarded as an ordinary BLAGAB management |
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(4) | Section 1251(1) and (2) of CTA 2009 (car hire) apply for the purpose of |
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determining the amount of the ordinary BLAGAB management expense of the |
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(5) | For the purposes of subsections (2) to (4)— |
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(a) | references in section 1249 or 1251 of CTA 2009 to a company with |
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investment business are to be read as references to a company carrying |
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on basic life assurance and general annuity business (and, accordingly, |
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the reference in section 1251(1) to total profits is to be read as a reference |
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to profits of basic life assurance and general annuity business), and |
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(b) | references in section 1249 or 1251 of CTA 2009 to an amount being |
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deductible under section 1219 of CTA 2009 are to be read as references |
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to an amount being deductible as an ordinary BLAGAB management |
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(a) | an amount is reduced as a result of subsection (4) or a corresponding |
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(b) | subsequently there is a rebate (however described) of the hire charges, |
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(c) | an amount representing the rebate is deductible as a reversed expense |
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or taken into account in calculating the amount of an I - E receipt under |
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| the amount that would otherwise be so deductible or taken into account is |
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(a) | an amount is reduced as a result of subsection (4) or a corresponding |
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(b) | subsequently a debt in respect of any of the hire charges is released |
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otherwise than as part of a statutory insolvency arrangement, and |
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(c) | an amount representing the release is deductible as a reversed expense, |
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| the amount that would otherwise be so deductible is reduced by 15%. |
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(8) | For the purposes of subsections (6) and (7)— |
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“corresponding rule” means section 56(2) or 1251(2) of CTA 2009 or |
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section 48(2) of ITTOIA 2005, |
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“deductible as a reversed expense” means deductible at step 4 in section |
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76 as an expense reversed in an accounting period, and |
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“statutory insolvency arrangement” has the meaning given by section |
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83 | General annuity business |
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(1) | This section applies if an insurance company pays qualifying BLAGAB |
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annuities in an accounting period. |
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(2) | An amount equal to the difference between— |
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(a) | the total amount of those annuities paid by the company in the |
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(b) | the total of the amounts exempt under section 717 of ITTOIA 2005 |
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(exemption for part of purchased life annuity payments) contained in |
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| is treated for the purposes of section 76 as a deemed BLAGAB management |
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expense for the accounting period. |
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(3) | An annuity is a “qualifying BLAGAB annuity” if— |
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(a) | it is referable to the company’s basic life assurance and general annuity |
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(b) | it is paid under a contract made by the company in an accounting |
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period beginning on or after 1 January 1992 (but see section 85). |
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(4) | For the purposes of this section the amounts exempt under section 717 of |
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ITTOIA 2005 are so much of the payments under the qualifying BLAGAB |
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annuities as would be within the exemption under that section if— |
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(a) | section 718 of ITTOIA 2005 were omitted, and |
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(b) | the exemption under section 717 of ITTOIA 2005 applied in relation to |
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companies as well as individuals. |
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(5) | If a qualifying BLAGAB annuity (“the actual annuity”) is a steep-reduction |
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annuity, the calculations required by subsection (2)(a) and (b) are to be made |
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(a) | the contract for the actual annuity provided instead for the annuities |
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identified below (“the deemed annuities”), and |
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(b) | the consideration for each of the deemed annuities were equal to an |
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apportionment of the consideration for the actual annuity on a just and |
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(6) | The deemed annuities are— |
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(a) | an annuity the payments in respect of which are confined to payments |
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in respect of the actual annuity that fall to be made at the earliest time |
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for the making in respect of that annuity of a reduced payment within |
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(b) | an annuity the payments in respect of which are all the payments in |
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respect of the actual annuity other than those mentioned in paragraph |
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(7) | If a deemed annuity within subsection (6)(b) (“the later annuity”) would itself |
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be a steep-reduction annuity, the deemed annuities— |
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(a) | do not include the later annuity, but |
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(b) | include instead the annuities which would be identified by subsection |
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(6) (with as many further applications of this subsection as may be |
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necessary for securing that none of the deemed annuities is a steep- |
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reduction annuity) if references in that subsection to the actual annuity |
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were to the later annuity. |
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(8) | This section needs to be read with section 84 (meaning of “steep-reduction |
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84 | General annuity business: meaning of “steep-reduction annuity” etc |
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(1) | For the purposes of section 83 an annuity is a “steep-reduction annuity” if— |
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(a) | the amount of any payment in respect of it (but not its term) depends |
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on a contingency other than the duration of a human life or lives, |
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(b) | the annuitant is entitled to payments of different amounts at different |
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(c) | the payments include a payment (“a reduced payment”) of an amount |
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which is substantially smaller than the amount of at least one of the |
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(2) | If there are different intervals between the payments, it is to be assumed for the |
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purposes of subsection (1)(b) and (c)— |
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(a) | that the annuitant’s entitlement, after the first payment, to payments is |
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an entitlement to payments at yearly intervals on the anniversary of the |
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(b) | that the amount to which the annuitant is assumed to be entitled is |
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equal to the annuitant’s assumed entitlement for the year ending with |
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the anniversary in question. |
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(3) | For this purpose the annuitant’s assumed entitlement for a year is determined |
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(a) | the annuitant’s entitlement to each payment is taken to accrue at a |
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constant rate during the interval between the previous payment and |
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(b) | the annuitant’s assumed entitlement for a year is taken to be equal to |
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the total amount which, in accordance with paragraph (a), is treated as |
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(4) | In the case of an annuity to which subsection (2) applies, the reference in |
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section 83(6)(a) to the making of a reduced payment is to be read as a reference |
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to the making of a payment which (applying subsection (3)(a)) is taken to |
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accrue at a rate that is substantially less than the rate at which at least one of |
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the earlier payments is taken to accrue. |
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(a) | a question arises whether a payment is substantially smaller than, or |
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accrues at a rate substantially less than, an earlier payment, and |
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(b) | the annuitant or (as the case may be) every annuitant is an individual |
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who is beneficially entitled to all the rights conferred on him or her as |
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| the question is determined without regard to so much of the difference |
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between the amounts or rates as is referable to a reduction falling to be made |
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(6) | If the amount of any one or more of the payments depends on a contingency, |
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the annuitant’s entitlement to the payments is determined for the purposes of |
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section 83 and this section according to whatever is the most likely outcome in |
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relation to the contingency (applying any relevant actuarial principles). |
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(7) | If an agreement or other arrangement has effect for varying the rights of the |
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annuitant in relation to a payment, the payment is taken for the purposes of |
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section 83 and this section to be a payment of the amount to which the |
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annuitant is entitled in accordance with the agreement or other arrangement. |
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(8) | For the purposes of this section references to a contingency include a |
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contingency consisting wholly or partly in the exercise of an option. |
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85 | General annuity business: payments made in pre-1992 accounting periods |
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(a) | a payment in respect of an annuity is made by an insurance company |
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under a group annuity contract made in a pre-1992 accounting period, |
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(b) | the company’s liabilities first include an amount in respect of that |
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annuity in a post-1992 accounting period, |
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| the payment is treated for the purposes of section 83(3)(b) as if the contract had |
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been made in a post-1992 accounting period. |
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(a) | a payment in respect of an annuity is made by a re-insurer under a re- |
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insurance treaty made in a pre-1992 accounting period, and |
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(b) | the re-insurer’s liabilities first include an amount in respect of that |
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annuity in a post-1992 accounting period, |
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| the payment is, as respects the re-insurer, treated for the purposes of section |
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83(3)(b) as if the treaty had been made in a post-1992 accounting period. |
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“a pre-1992 accounting period” means an accounting period beginning |
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“a post-1992 accounting period” means an accounting period beginning |
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on or after 1 January 1992, |
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“group annuity contract” means a contract under which the insurance |
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company undertakes to become liable to pay annuities to or in respect |
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of persons who may subsequently be specified or otherwise ascertained |
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under or in accordance with the contract (whether or not annuities |
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under the contract are also payable to or in respect of persons who are |
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specified or ascertained at the time the contract is made), and |
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“re-insurance treaty” means a contract under which one insurance |
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company is obliged to cede, and another (referred to in this section as a |
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“re-insurer”) to accept, the whole or part of a risk of a class or |
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description to which the contract relates. |
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Special rules applying to I - E basis |
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86 | Separate property businesses for BLAGAB etc |
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(1) | This section modifies the rules in sections 208 and 209 of CTA 2009 (basic |
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meaning of UK and overseas property business) for the purpose of applying |
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the I - E rules in relation to an insurance company. |
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(2) | The company is treated as carrying on separate UK property businesses or |
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overseas property businesses in accordance with the following provisions. |
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(3) | The exploitation of land held otherwise than for the purposes of the company’s |
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long-term business is treated as a separate business from the exploitation of |
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land held for those purposes. |
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(4) | In the case of the exploitation of land held for the purposes of the company’s |
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long-term business, each of the following is treated as a separate business— |
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(a) | the exploitation of land which is matched to BLAGAB liabilities of the |
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(b) | the exploitation of land which is matched to other long-term business |
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liabilities of the company, and |
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(c) | the exploitation of land so far as it is not matched to long-term business |
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liabilities of the company. |
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(5) | In the case of land part of which is matched to a BLAGAB liability or other |
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long-term business liability, only the part of the land in question is to count for |
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the purposes of this section as matched to the liability in question. |
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(6) | In this section “land” means any estate, interest or right in or over land. |
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87 | Losses from property businesses where land held for long-term business |
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(1) | This section applies for the purpose of applying the I - E rules in relation to an |
| |
insurance company if, in an accounting period, the company makes a loss in |
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any of its separate UK property businesses or overseas property businesses |
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(2) | The provisions of Chapter 4 of Part 4 of CTA 2010 (loss relief: property |
| 30 |
businesses) do not apply to the loss. |
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(3) | So far as the loss is referable, in accordance with Chapter 4, to the company’s |
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basic life assurance and general annuity business, it is treated for the purposes |
| |
of section 76 as a deemed BLAGAB management expense for the accounting |
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(4) | If the company has two or more separate property businesses within section |
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86(4), then for the purposes of subsection (3) the loss in question is taken to be |
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the total net loss after— |
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(a) | setting the losses from the businesses which are referable, in |
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accordance with Chapter 4, to the company’s basic life assurance and |
| 40 |
general annuity business, against |
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(b) | the profits from the businesses which are so referable. |
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