Finance Bill

Session 2012 - 13
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Finance Bill

Finance Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 8 — Assets held for purposes of long-term business
74

(5)
For the purposes of this section, securities (whether situated in the United
Kingdom or elsewhere) are “UK securities” of an overseas life insurance
company 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
5
business.
121
Sections 119 and 120: supplementary
(1)
The applicable pooling rules also apply if the assets of the company in question
include securities of a class and but for this section—
(a)
some of them would be regarded as a 1982 holding for the purposes of
10
corporation tax on chargeable gains, and
(b)
the rest of them would be regarded as a section 104 holding for those
purposes.
(2)
“The applicable pooling rules” means—
(a)
the pooling rules set out in section 119(1)(a) to (e) and (4)(a) and (b), or
15
(b)
the pooling rules set out in section 120(1)(a) to (f) and (4)(a) to (c).
(3)
In applying the applicable pooling rules in a case within subsection (1)—
(a)
the reference in any of the paragraphs in section 119(1) or (4) or 120(1)
or (4) to a separate holding is to be read, where necessary, as a reference
to a separate 1982 holding and a separate section 104 holding, and
20
(b)
the questions whether that reading is necessary for a paragraph and, if
it is, how many securities falling within the paragraph constitute each
of the two holdings are determined in accordance with paragraph 12 of
Schedule 6 to FA 1990 and the identification rules applying on any
subsequent acquisitions and disposals.
25
(4)
If the applicable pooling rules apply, section 105 of TCGA 1992 has effect as if
securities regarded as included in different holdings as a result of those rules
were securities of different classes.
(5)
In this section—
“1982 holding” has the same meaning as in section 109 of TCGA 1992, and
30
“section 104 holding” has the same meaning as in section 104(3) of TCGA
1992.
(6)
In this section and sections 119 and 120 “securities” means—
(a)
shares,
(b)
securities of a company, and
35
(c)
any other assets where they are of a nature to be dealt in without
identifying the particular assets disposed of or acquired.
Long-term business fixed capital
122
Assets forming part of long-term business fixed capital
For the purposes of this Chapter assets that form part of the long-term business
40
fixed capital of an insurance company are to be regarded as assets held by the
company otherwise than for the purposes of its long-term business.

Finance Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 9 — Relief for BLAGAB trade losses etc
75

Chapter 9
Relief for BLAGAB trade losses etc
The reliefs
123
Relief for BLAGAB trade losses against total profits
(1)
Section 37 of CTA 2010 (relief for trade losses against total profits) is to apply
5
in relation to a BLAGAB trade loss for an accounting period as it applies in
relation to any other loss made in a trade for an accounting period.
(2)
Subsection (1) applies despite the fact that, had there been a BLAGAB trade
profit for the accounting period, that profit would not have been charged to tax
under section 35 of CTA 2009 and the I - E rules would have been applicable
10
instead.
124
Carry forward of BLAGAB trade losses against subsequent profits
(1)
This section applies if an insurance company carrying on basic life assurance
and general annuity business makes a BLAGAB trade loss for an accounting
period.
15
(2)
Relief is available under this section for that part of the BLAGAB trade loss
(“the unrelieved loss”) for which no relief is given under section 37 of CTA 2010
(as applied by section 123).
(3)
The relief for the unrelieved loss is to be given as follows.
(4)
The unrelieved loss is to be carried forward to subsequent accounting periods
20
(so long as the company continues to carry on basic life assurance and general
annuity business).
(5)
For the purposes of—
(a)
section 93 (minimum profits charge), and
(b)
section 104 (policyholders’ rate of tax),
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the BLAGAB trade profit of any such period is reduced by the unrelieved loss
so far as that loss cannot be used under this subsection to reduce the BLAGAB
trade profit of an earlier period.
(6)
Relief under this section is subject to restriction or modification in accordance
with section 137(7) of CTA 2010 and other applicable provisions of the
30
Corporation Tax Acts.
125
Group relief
(1)
Part 5 of CTA 2010 (group relief) is to apply in relation to a BLAGAB trade loss
for an accounting period as it applies in relation to any other loss made in a
trade for an accounting period.
35
(2)
Subsection (1) applies despite the fact that, had there been a BLAGAB trade
profit for the accounting period, that profit would not have been charged to tax
under section 35 of CTA 2009 and the I - E rules would have been applicable
instead.
(3)
If for an accounting period an insurance company has—
40

Finance Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 9 — Relief for BLAGAB trade losses etc
76

(a)
an I - E profit, and
(b)
losses or other amounts within section 99(1)(d) to (g) of CTA 2010,

the company’s gross profits of the accounting period for the purposes of
section 105 of that Act (restriction on surrender of those amounts) are not to
include the policyholders’ share of the I - E profit (as determined for the
5
purposes of section 102).
Restrictions
126
Restrictions in respect of non-trading deficit
The amount of a BLAGAB trade loss for an accounting period of an insurance
company that is available for relief under—
10
(a)
section 37 of CTA 2010 (as applied by section 123), or
(b)
Part 5 of CTA 2010 (group relief) (as applied by section 125),
is to be reduced by the amount of any non-trading deficit which the company
has for the accounting period under section 388 of CTA 2009 (loan
relationships and derivative contracts).
15
127
No relief against policyholders’ share of I - E profit
(1)
This section applies in the case of an insurance company carrying on basic life
assurance and general annuity business.
(2)
None of the following reliefs are to be given against the policyholders’ share of
any I - E profit of the company for any accounting period (as determined for
20
the purposes of section 102).
(3)
The reliefs in question are—
(a)
relief under section 37 of CTA 2010 (including as applied by section
123),
(b)
relief under Chapter 2 or 4 of Part 4 of CTA 2010 (loss relief),
25
(c)
relief under Part 5 of CTA 2010 (group relief) (including as applied by
section 125),
(d)
relief in respect of any qualifying charitable donation,
(e)
relief in respect of any amount representing a non-trading deficit on the
company’s loan relationships calculated otherwise than by reference to
30
debits and credits referable, in accordance with Chapter 4, to its basic
life assurance and general annuity business.
(4)
If the company’s basic life assurance and general annuity business is mutual
business, subsection (3)(d) does not apply.

Finance Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 10 — Transfers of long-term business
77

Chapter 10
Transfers of long-term business
Transfers of BLAGAB
128
Relief for transferee in respect of transferor’s BLAGAB expenses
(1)
This section applies if, under an insurance business transfer scheme, there is a
5
transfer of basic life assurance and general annuity business (or any part of that
business) from one insurance company to another.
(2)
Acquisition expenses relief is to be given to the transferee for any acquisition
expenses for which, on the assumptions set out below, that relief would have
been given to the transferor for an accounting period starting after the date of
10
the transfer.
(3)
“Acquisition expenses relief” means relief given, in accordance with section 79
(spreading of acquisition expenses), at step 3 in section 76.
(4)
For the transferee’s first accounting period ending after the date of the transfer,
acquisition expenses relief for the acquisition expenses within subsection (2) is
15
to be determined as if that period had started with the date after the date of the
transfer.
(5)
Relief at step 5 in section 76 is to be given to the transferee for any excess
BLAGAB expenses for which, on the assumptions set out below, that relief
would have been given to the transferor for an accounting period starting after
20
the date of the transfer.
(6)
For the purposes of this section it is to be assumed that—
(a)
the transferor had continued to carry on the transferred business after
the transfer, and
(b)
the transferor had an accounting date ending with the date of the
25
transfer (if that would not otherwise be the case).
(7)
If the transfer is a transfer of part of the business, references in this section to
any expenses are to be read as references to the appropriate part of the
expenses.
(8)
Any relief given to the transferee as a result of this section is instead of any
30
relief that would otherwise have been given to the transferor.
129
Intra-group transfers and demutualisation
(1)
This section applies if—
(a)
under an insurance business transfer scheme, there is a transfer of basic
life assurance and general annuity business (or any part of that
35
business) from one insurance company to another, and
(b)
the transfer is a relevant intra-group transfer or is in connection with a
demutualisation.
(2)
A transfer is a “relevant intra-group transfer” if—
(a)
the transferor and transferee are members of the same group of
40
companies when the transfer occurs, and

Finance Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 10 — Transfers of long-term business
78

(b)
the transferee is within the charge to corporation tax in relation to the
transfer.
(3)
A transfer is “in connection with a demutualisation” if—
(a)
it is for the purposes of the conversion of a company (under the law of
any territory) from one without share capital to one with share capital
5
(without any change of legal personality), or
(b)
it is a transfer by a mutual life insurance company of all, or
substantially all, of its basic life assurance and general annuity business
to an insurance company which is not a mutual life insurance company,

and for the purposes of paragraph (b) a “mutual life insurance company”
10
means an insurance company which carries on mutual life assurance business.
(4)
For the purpose of calculating the BLAGAB trade profit or loss of the transferor
for any accounting period, any amount in respect of the transfer that is debited
or credited in accounts drawn up by the transferor in accordance with
generally accepted accounting practice is to be ignored.
15
(5)
For the purpose of calculating the BLAGAB trade profit or loss of the transferee
for any accounting period, any amount in respect of the transfer that is debited
or credited in accounts drawn up by the transferee in accordance with
generally accepted accounting practice is to be ignored.
(6)
If this section applies, the provisions of Part 4 of TIOPA 2010 (transfer pricing)
20
do not apply.
130
Transfers between non-group companies: present value of in-force business
(1)
This section applies if—
(a)
under an insurance business transfer scheme, there is a transfer of basic
life assurance and general annuity business (or any part of that
25
business) from one insurance company to another,
(b)
the transferor and transferee are not members of the same group of
companies when the transfer occurs,
(c)
the accounts of the transferee drawn up in accordance with generally
accepted accounting practice include an asset that represents, as at the
30
time of the transfer, the value of future profits arising from the business
(or part of the business) transferred, and
(d)
the asset is not one to which Part 8 of CTA 2009 (intangible fixed assets)
applies.
(2)
Amounts in respect of the asset that are debited or credited in accounts drawn
35
up by the transferee in accordance with generally accepted accounting practice
are to be taken into account in calculating the BLAGAB trade profit or loss of
the transferee.
(3)
For the purposes of subsection (1)(c) no account is to be taken of an asset so far
as it is regarded for accounting purposes as internally-generated.
40
(4)
This section does not apply in any case where section 129(5) applies in relation
to the transferee.
(5)
Nothing in this section is to apply in relation to transfers taking place before 1
January 2013.