Finance Bill

Session 2012 - 13
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Finance Bill

Finance Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 12 — Supplementary
86

Expression
Where explained

with-profits fund
section 139(1)

(2)
The expressions in the above table have the same meaning in any other
provision of the Corporation Tax Acts that makes special provision in relation
to—
5
(a)
insurance companies,
(b)
any category of life assurance business carried on by insurance
companies, or
(c)
long-term business carried on by insurance companies.
Chapter 12
10
Supplementary
Powers conferred on Treasury or HMRC Commissioners
142
Power to amend Part 2 etc
(1)
If, in consequence of the exercise of any power under FISMA 2000, they
consider it expedient to do so, the Treasury may by order amend—
15
(a)
this Part, or
(b)
any other provision of the Corporation Tax Acts that makes special
provision in relation to insurance companies, any category of life
assurance business carried on by insurance companies or long-term
business carried on by insurance companies.
20
(2)
An order under subsection (1) may be made so as to have effect in relation to—
(a)
any period ending on or before the day on which the order is made, or
(b)
any period beginning before and ending after that day,

but only if the power under FISMA 2000 is exercised so as to have effect in
relation to the period.
25
(3)
An order under subsection (1) may—
(a)
make different provision for different cases or circumstances, and
(b)
contain incidental, supplementary, consequential, transitional,
transitory or saving provision.
143
Power to amend definition of “insurance business transfer scheme” etc
30
(1)
If, in consequence of any amendment of section 105 of FISMA 2000 (insurance
business transfer schemes), they consider it expedient to do so, the Treasury
may by order amend—
(a)
the definition of “insurance business transfer scheme” given by section
139, or
35
(b)
any other provision of the Corporation Tax Acts that makes special
provision in relation to insurance companies, any category of life
assurance business carried on by insurance companies or long-term
business carried on by insurance companies.
(2)
An order under subsection (1) may be made so as to have effect in relation to—
40

Finance Bill
Part 2 — Insurance companies carrying on long-term business
Chapter 12 — Supplementary
87

(a)
any period ending on or before the day on which the order is made, or
(b)
any period beginning before and ending after that day,

but only if the amendment of section 105 of FISMA 2000 has effect in relation
to that period.
(3)
An order under subsection (1) may—
5
(a)
make different provision for different cases or circumstances, and
(b)
contain incidental, supplementary, consequential, transitional,
transitory or saving provision.
144
Power to modify provisions applying to overseas life insurance companies
(1)
The Treasury may by regulations provide for the Corporation Tax Acts to have
10
effect in relation to overseas life insurance companies subject to such
exceptions and other modifications as may be prescribed by the regulations.
(2)
The power under subsection (1) includes power to make provision in place of,
and in consequence to repeal or revoke, any provision in relation to overseas
life insurance companies which is made by or under—
15
(a)
this Part, or
(b)
any other provision of the Corporation Tax Acts.
(3)
Regulations under subsection (1) may be made so as to have effect in relation
to any period ending on or after the day on which the regulations are made.
(4)
Regulations under subsection (1) may—
20
(a)
make different provision for different cases or circumstances, and
(b)
contain incidental, supplementary, consequential, transitional,
transitory or saving provision.
(5)
The power to make consequential provision conferred by subsection (4)(b)
includes power to amend any provision made by or under any Act.
25
145
Orders and regulations
(1)
Any power of the Treasury or HMRC Commissioners to make any order or
regulations under this Part is exercisable by statutory instrument.
(2)
Any statutory instrument containing any order or regulations made by the
Treasury or HMRC Commissioners under this Part is subject to annulment in
30
pursuance of a resolution of the House of Commons.
(3)
Nothing in this Part that authorises the inclusion of any particular kind of
provision in any order or regulations under this Part is to be read as restricting
the generality of the provision that may be included in the order or regulations.
Minor and consequential amendments and transitional provision
35
146
Minor and consequential amendments
Schedule 16 contains minor and consequential amendments.

Finance Bill
Part 3 — Friendly societies carrying on long-term business
88

147
Transitional provision
Schedule 17 contains transitional provision in connection with the coming into
force of this Part.
Commencement etc
148
Commencement
5
(1)
The provisions of this Part (other than section 149) have effect in relation to
accounting periods of companies beginning on or after 1 January 2013.
(2)
Subsection (1) is subject to the operation of any provision of Schedule 17 in
relation to times before that date.
149
Accounting periods straddling 1 January 2013
10
(1)
If, apart from this section, an insurance company would have had an
accounting period beginning before 1 January 2013 and ending on or after that
date, the accounting period of the company is to end instead on 31 December
2012.
(2)
Accordingly, the rules in section 10 of CTA 2009 (end of accounting period) are
15
subject to this section.
Part 3
Friendly societies carrying on long-term business
Outline of provisions of Part
150
Overview
20
(1)
This Part makes special provision for corporation tax purposes in relation to
long-term and other business carried on by friendly societies.
(2)
Sections 151 and 152 contain provision for applying provisions of the
Corporation Tax Acts relating to insurance companies so that they also apply
to friendly societies, subject to provision made by regulations.
25
(3)
Sections 153 to 163 make provision for, and in connection with, a special
exemption from corporation tax for BLAGAB or eligible PHI business.
(4)
Sections 164 to 169 make provision for, and in connection with, a further
exemption from corporation tax for other business.
(5)
The remainder of the Part contains—
30
(a)
provision in relation to certain transfer schemes (see section 170),
(b)
provision for an exemption from corporation tax for unregistered
friendly societies (see section 171), and
(c)
definitions and other supplementary material (see sections 172 to 179).

Finance Bill
Part 3 — Friendly societies carrying on long-term business
89

Long-term business rules to apply to friendly societies
151
  Friendly societies subject to same basic rules as mutual insurers
(1)
The Corporation Tax Acts apply to—
(a)
life assurance business carried on by friendly societies, and
(b)
other long-term business carried on by friendly societies,
5

in the same way as they apply respectively to mutual life assurance business
carried on by insurance companies and other long-term business carried on by
insurance companies.
(2)
Subsection (1) does not apply to business which is exempt BLAGAB or eligible
PHI business.
10
(3)
The Treasury may by regulations provide that the Corporation Tax Acts as
applied by subsection (1) have effect subject to such exceptions or other
modifications as may be prescribed by the regulations.
(4)
The regulations may require any part of any business to be treated as a separate
business.
15
(5)
The regulations may make provision having retrospective effect.
(6)
The regulations may—
(a)
make different provision for different cases or circumstances, and
(b)
contain incidental, supplementary, consequential, transitional,
transitory or saving provision.
20
152
Friendly societies subject to transfer of business rules
(1)
In this section “the transfer of business rules” means—
(a)
Chapter 10 of Part 2, and
(b)
any other provisions of the Corporation Tax Acts that apply on the
transfer from an insurance company to another insurance company of
25
the whole or part of its life assurance business or of its other long-term
business.
(2)
The transfer of business rules apply in the same way—
(a)
on the transfer of the whole or part of the business of a friendly society
to another friendly society,
30
(b)
on the amalgamation of friendly societies,
(c)
on the transfer of the whole or part of the business of a friendly society
to a company which is not a friendly society,
(d)
on the conversion of a friendly society into a company which is not a
friendly society, and
35
(e)
on the transfer of the whole or part of the business of an insurance
company to a friendly society.
(3)
The Treasury may by regulations provide that the transfer of business rules as
applied by subsection (2) have effect subject to such exceptions or other
modifications as may be prescribed by the regulations.
40
(4)
The regulations may make provision having retrospective effect.
(5)
The regulations may—
(a)
make different provision for different cases or circumstances, and

Finance Bill
Part 3 — Friendly societies carrying on long-term business
90

(b)
contain incidental, supplementary, consequential, transitional,
transitory or saving provision.
Exempt BLAGAB or eligible PHI business
153
Exemption for certain BLAGAB or eligible PHI business
(1)
A friendly society is not liable to pay corporation tax (whether on income or
5
chargeable gains) on its profits arising from exempt BLAGAB or eligible PHI
business.
(2)
The exemption applies only if the society makes a claim.
(3)
For the meaning of “BLAGAB or eligible PHI business”, see section 154.
(4)
For the meaning of “exempt” BLAGAB or eligible PHI business, see section
10
155.
154
Meaning of “BLAGAB or eligible PHI business”
(1)
In this Part “BLAGAB or eligible PHI business” means—
(a)
basic life assurance and general annuity business, and
(b)
any PHI business so far as consisting of the effecting or carrying out of
15
qualifying contracts,

but see subsections (3) and (4) for some qualifications.
(2)
A contract is a “qualifying” contract if—
(a)
it is made before 1 September 1996, or
(b)
it is made on or after that date and it also falls within paragraph I, II or
20
III of Part 2 of Schedule 1 to the FISMA (Regulated Activities) Order
2001.
(3)
A contract made before 1 September 1996 which effects a policy affording
provision for injury, sickness or other infirmity is to be regarded for the
purposes of this Part as forming part of “BLAGAB or eligible PHI business”
25
only if—
(a)
the policy also affords assurance for a gross sum independent of injury,
sickness or other infirmity,
(b)
at least 60% of the total premiums are attributable to the provision
afforded during injury, sickness or other infirmity, and
30
(c)
there is no bonus or addition which may be declared or accrue upon the
assurance of the gross sum.
(4)
Business is not to be regarded as “BLAGAB or eligible PHI business” of a
friendly society for the purposes of this Part so far as it consists of the assurance
of any annuity the consideration for which consists of sums obtainable—
35
(a)
on the maturity, or
(b)
on the surrender,

of any other policy of assurance issued by the society which forms part of its
exempt BLAGAB or eligible PHI business.