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Finance Bill (HC Bill 49)

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Period over which deemed receipts or expenses arise

11 (1) A receipt or expense within paragraph 9 or 10 is to be treated as arising over
the period of 10 years beginning with 1 January 2013.

(2) The amount of the receipt or expense apportioned to (and treated as arising
5in) any accounting period falling wholly or partly in that 10-year period is to
be determined in proportion to the number of days of the accounting period
falling within that 10-year period.

(3) This paragraph does not apply to a receipt which consists of a relevant court-
protected item within the meaning of paragraph 12.

(4) 10This paragraph is subject to paragraphs 13 to 15 (transfers and cessation of
business etc).

12 (1) For the purposes of this paragraph a “relevant court-protected item” means
a relevant computational item that relates to an excess of assets over
liabilities held in a non-profit fund in respect of which an order made by a
15court is in force preventing the distribution of the excess (in any
circumstances whatever) before the end of a period specified in the order.

(2) A receipt within paragraph 9 or 10 consisting of a relevant court-protected
item is to be treated as arising over the period of 10 years beginning with the
relevant day.

(3) 20The relevant day is whichever of the following days occurs first—

(a) the day on which the court order ceases to be in force, or

(b) 1 January 2015.

(4) The amount of the receipt apportioned to (and treated as arising in) any
accounting period falling wholly or partly in that 10-year period is to be
25determined in proportion to the number of days of the accounting period
falling within that 10-year period.

(5) This paragraph is subject to paragraphs 13 to 15 (transfers and cessation of
business etc).

13 (1) This paragraph applies if—

(a) 30under an insurance business transfer scheme, there is a transfer from
one insurance company to another of basic life assurance and general
annuity business (or any part of that business) or non-BLAGAB long-
term business (or any part of that business),

(b) the transfer is a relevant intra-group transfer, and

(c) 35the transfer occurs at a time when the full amount of the receipts or
expenses within paragraph 9 or 10 of the business the whole or part
of which is transferred has not been treated as arising.

(2) A transfer is a “relevant intra-group transfer” for the purposes of this
paragraph if—

(a) 40the transferor and the transferee are members of the same group of
companies when the transfer occurs (as determined in accordance
with section 170(2) to (11) of TCGA 1992), and

(b) the transferee is within the charge to corporation tax in relation to the
transfer.

(3) 45The receipts or expenses are to continue to be dealt with in accordance with
the provisions of this Schedule, but are treated as arising to the transferee

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over so much of the 10-year period in question as falls on or after the date on
which the transfer takes place.

(4) If only part of a business is transferred—

(a) the appropriate proportion of the receipts or expenses is treated as
arising to the transferee over so much of the 10-year period in
5question as falls on or after the date on which the transfer takes place,
and

(b) the remainder of the receipts or expenses is treated as arising to the
transferor over so much of that period.

(5) The appropriate proportion of the receipts or expenses of a business is equal
10to the proportion which the value of the liabilities relating to the part of the
business transferred bears to the total value of the liabilities of the whole of
the business.

(6) For the purposes of this paragraph and paragraphs 11 and 12 the accounting
periods of the transferor and the transferee in which the transfer takes place
15are deemed to end immediately before the transfer takes place.

14 (1) This paragraph applies if—

(a) under an insurance business transfer scheme, there is a transfer from
one insurance company to another of basic life assurance and general
annuity business (or any part of that business) or non-BLAGAB long-
20term business (or any part of that business),

(b) the transfer is not a relevant intra-group transfer for the purposes of
paragraph 13, and

(c) the transfer occurs at a time when the full amount of the deemed
receipts or expenses of the relevant business has not been treated as
25arising to the transferor.

(2) The remaining amount of the deemed receipts or expenses of the relevant
business is to be treated as arising to the transferor in the accounting period
in which the transfer takes place.

(3) In this paragraph references to the deemed receipts or expenses of the
30relevant business—

(a) are references to the receipts or expenses within paragraph 9 or 10 of
the business the whole or part of which is transferred, but

(b) do not include references to so much of those receipts or expenses as
fall (or have fallen) to be treated as arising to a company other than
35the company which is the transferor for the purposes of this
paragraph.

15 (1) This paragraph applies if—

(a) an insurance company ceases at any time to carry on basic life
assurance and general annuity business or non-BLAGAB long-term
40business otherwise than as a result of a transfer under an insurance
business transfer scheme, and

(b) at that time the full amount of the deemed receipts or expenses of the
business concerned has not been treated as arising to the company.

(2) The remaining amount of the deemed receipts or expenses of the business
45concerned is to be treated as arising to the company in the accounting period
in which it ceases to carry on the business concerned.

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(3) For the purposes of this paragraph an insurance company is to be regarded
as ceasing to carry on a business at any time if, at that time, it ceases to be
within the charge to corporation tax in relation to the business.

(4) In this paragraph references to the deemed receipts of the business
5concerned—

(a) are references to the receipts or expenses within paragraph 9 or 10 of
the business concerned, but

(b) do not include references to so much of those receipts or expenses as
fall (or have fallen) to be treated as arising to a company other than
10the company concerned.

Financing-arrangement-funded transfers to shareholders in relation to non-profit funds

16 (1) This paragraph applies if, as at 1 January 2013, an insurance company has an
unrelieved charge under subsection (3) of section 83YC of FA 1989 (FAFTS:
charge in relevant period of account).

(2) 15An insurance company has, as at that date, an unrelieved charge under that
subsection if either—

(a) that subsection has operated in the case of the company for the
period of account ending immediately before that date (“the 2012
period of account”), or

(b) 20that subsection has operated in the case of the company for one or
more earlier periods of account, and the total of the amounts which
are the relevant amount for the 2012 period of account or those
earlier periods under section 83YD of FA 1989 does not exceed the
amount which is the taxed amount under that section.

(3) 25The appropriate amount of the unrelieved charge is to be treated for the
purposes of this Part of this Schedule as if it were a relevant computational
item of a negative amount.

(4) The appropriate amount of the unrelieved charge is whichever is the smaller
of—

(a) 30in a case within sub-paragraph (2)(a), the amount brought into
account under section 83YC(3) of FA 1989, or, in a case within sub-
paragraph (2)(b), the amount by which the taxed amount mentioned
there exceeds the relevant amount mentioned there, and

(b) the sum of the outstanding debt amount and the outstanding re-
35insurance amount.

(5) “The outstanding debt amount” means the total amount of the credits
brought into account by the company in relation to a non-profit fund for the
purposes of section 83YC of FA 1989 as part of total income—

(a) for the 2012 period of account, or

(b) 40for any earlier period of account,

in respect of relevant money debts to the extent that they have not been
repaid before that date.

(6) “The outstanding re-insurance amount” means the total of the amounts
which would (but for section 83YF(2) of FA 1989) have been taken into
45account in calculating the profits of the company’s life assurance business in
accordance with the life assurance trade profits provisions—

(a) for the 2012 period of account, or

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(b) for any earlier period of account,

in respect of the re-insurance of relevant liabilities to the extent that they
have not ceased to be re-insured before that date.

(7) Any expression which is used in this paragraph and in section 83YC of FA
51989 has the same meaning in this paragraph as in that section.

(8) In this paragraph references to sections 83YC and 83YD of FA 1989 include
references to those sections as they have effect in accordance with paragraph
4(2) to (6) of Schedule 17 to FA 2008.

Anti-avoidance

17 (1) 10This paragraph applies if—

(a) on or after 21 March 2012 an insurance company (“C”) enters into
any arrangements or does any other thing directly or indirectly for
the purposes of, or in connection with, the operation of the
transitional rules, and

(b) 15the main purpose, or one of the main purposes, of C in entering into
the arrangements or doing the other thing is an unallowable
purpose.

(2) A purpose is an “unallowable purpose” if—

(a) it consists of securing a tax advantage for C or any other company
20which is connected to the operation of the transitional rules, or

(b) it is not amongst C’s business or other commercial purposes.

(3) If a tax advantage connected to the operation of the transitional rules arises
to C, an officer of Revenue and Customs may make such adjustments as are
required to negate the tax advantage so far as referable to the unallowable
25purpose on a just and reasonable apportionment.

(4) If a tax advantage connected to the operation of the transitional rules arises
to a company other than C, an officer of Revenue and Customs may make
such adjustments as are required to negate the tax advantage.

(5) The power to make adjustments under this paragraph includes power to
30make adjustments by any of the following means—

(a) an amendment of the company’s tax return under paragraph 34(2) or
(2A) of Schedule 18 to FA 1998 (amendment after enquiry),

(b) an assessment,

(c) the nullifying of a right to repayment,

(d) 35the requiring of the return of a repayment already made, and

(e) the calculation or recalculation of profits or gains or liability to
corporation tax.

(6) Nothing in this paragraph authorises the making of an assessment later than
6 years after the accounting period to which the tax advantage relates.

(7) 40For the purposes of this paragraph—

(a) “arrangement” includes any agreement, scheme, transaction or
understanding (whether or not legally enforceable),

(b) the reference to the operation of the transitional rules is a reference
to the operation of any provision made by or under this Part of this
45Schedule,

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(c) one example (among others) of entering into arrangements or
otherwise doing something for the purposes of, or in connection
with, the operation of those rules is entering into the arrangements
or otherwise doing the thing to secure that an item is, or is not, taken
5into account in calculating the total transitional difference, and

(d) section 1139 of CTA 2010 (meaning of “tax advantage”) applies, but
reading references to tax as references to corporation tax.

(8) If C is not within the charge to corporation tax in respect of a part of its
activities, C’s business or other commercial purposes for the purposes of this
10paragraph do not include the purposes of that part of its activities.

(9) This paragraph does not apply in any case if section 132 applies in that case.

18 (1) Paragraph 17 does not apply if, on an application by C, HMRC
Commissioners give a notice under this paragraph stating that they are
satisfied that the doing of the relevant things is or will be such that no action
15ought to be taken by an officer of Revenue and Customs under that
paragraph.

(2) The reference here to the doing of the relevant things is a reference to the
entering into of any arrangements, or the doing of any other thing, directly
or indirectly for the purposes of, or in connection with, the operation of the
20transitional rules (within the meaning of paragraph 17).

19 (1) An application under paragraph 18 must—

(a) be in writing, and

(b) contain particulars of the arrangements or the thing done or
proposed to be done.

(2) 25HMRC Commissioners may by notice require C to provide further
particulars in order to enable them to determine the application.

(3) A requirement may be imposed under sub-paragraph (2) within 30 days of
the receipt of the application or of any further particulars required under
that sub-paragraph.

(4) 30If a notice under that sub-paragraph is not complied with within 30 days or
such longer period as HMRC Commissioners may allow, they need not
proceed further on the application.

(5) HMRC Commissioners must give notice to C of their decision on an
application under paragraph 18

(a) 35within 30 days of receiving the application, or

(b) if they give a notice under sub-paragraph (2), within 30 days of that
notice being complied with or within such longer period as may be
agreed with C.

(6) If any particulars provided under this paragraph do not fully and accurately
40disclose all facts and considerations material for the decision of HMRC
Commissioners, any resulting notice under paragraph 18 is void.

Overseas life insurance companies

20 Receipts or expenses are not to be treated as arising under this Part of this
Schedule in a case where—

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(a) an overseas life insurance company has, in accordance with
international accounting standards, prepared accounts for a period
which includes 31 December 2012, and

(b) parts of the income statements included in those accounts are
5recognised for the purposes of sections 82A to 83ZA of FA 1989 as a
result of provision made by regulation 24 of the Overseas Life
Insurance Companies Regulations 2006.

Part 2 Specific transitional provisions

10Insurance company with BLAGAB consisting wholly of protection business

21 (1) This paragraph applies if—

(a) in its first accounting period to which this Part applies an insurance
company carries on business which, under the old law, would have
been basic life assurance and general annuity business,

(b) 15the business in question consists wholly of the effecting or carrying
out of contracts of long-term insurance in relation to which the
condition in section 62(2)(a) is met, and

(c) some or all of the contracts are made before 1 January 2013.

(2) On or before the filing date for that accounting period, the company may
20make an election for the contracts made before that date to be treated for the
purposes of section 62 as if they were made on or after that date.

(3) Accordingly, no relief is available for any amount that, but for the election,
would have constituted excess BLAGAB expenses for that accounting
period.

(4) 25The election has effect for the first accounting period of the company to
which this Part applies and all subsequent accounting periods.

(5) The election is irrevocable.

(6) In this paragraph—

  • “the filing date”, in relation to an accounting period of an insurance
    30company, means the date which, for the purposes of paragraph 14 of
    Schedule 18 to FA 1998, is the filing date for the company’s tax return
    for that period, and

  • “the old law” means the law as it had effect immediately before the day
    on which this Act is passed.

35Disregard of amounts previously taken into account for tax purposes

22 (1) This paragraph applies if, for an accounting period ending before 1 January
2013, an amount is taken into account in calculating the profits of an
insurance company arising from life assurance business in accordance with
the provisions applicable for the purposes of the taxation of such profits
40under section 35 of CTA 2009 (charge on trade profits).

(2) For any accounting period beginning on or after 1 January 2013—

(a) the amount is not to be taken into account in calculating the BLAGAB
trade profit or loss of any basic life assurance and general annuity
business carried on by the company, and

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(b) the amount is not to be taken into account in calculating for
corporation tax purposes the profits of any non-BLAGAB long-term
business carried on by the company.

23 For the purposes of section 76 an expense is to be treated as deductible under
5another relevant rule so far as it was brought into account at Step 1 in section
76(7) of ICTA as an expense referable to an accounting period ending before
1 January 2013.

Intangible fixed assets

24 (1) This paragraph applies to assets—

(a) 10which, under the old law, were assets excluded from Part 8 of CTA
2009 (intangible fixed assets), and

(b) which, as a result of provision made by this Part of this Act, become
assets which are not excluded from Part 8 of that Act.

(2) Any expenditure incurred before 1 January 2013 on an asset to which this
15paragraph applies is to be left out of account in determining any amount to
be brought into account under Part 8 of CTA 2009.

(3) Section 780 of CTA 2009 (company ceasing to be member of group: deemed
realisation and re-acquisition at market value) is not to apply in relation to
any asset to which this paragraph applies.

(4) 20For the purposes of this paragraph references to an asset’s exclusion from
Part 8 of CTA 2009 includes its exclusion from that Part except as respects
royalties.

(5) In this paragraph “the old law” means the law as it had effect immediately
before the day on which this Act is passed.

25Assets held for purposes of long-term business

25 (1) The rules in sections 116 to 118 apply in relation to anything occurring on or
after 1 January 2013 (and the rules in section 440 of ICTA, including as
modified, apply in relation to anything occurring before that date).

(2) Accordingly, the replacement of the rules in section 440 of ICTA with the
30different rules in sections 116 to 118 is not by itself sufficient to give rise to a
deemed disposal and re-acquisition for the purposes of corporation tax on
chargeable gains.

26 (1) The rules in sections 119 to 121 apply in relation to securities held on or after
1 January 2013 (and the rules in section 440A of ICTA, including as modified,
35apply in relation to securities held before that date).

(2) The replacement of the separate holdings given by section 440A of ICTA
(including as modified) with the separate holdings given by sections 119 to
121 is, for the purposes of corporation tax on chargeable gains, not to be
treated as involving a disposal or acquisition that gives rise to a chargeable
40gain or allowable loss.

(3) But see paragraph 27 for provision for carrying forward the base cost of the
old holdings into the base cost of the new holdings.

27 (1) This paragraph applies if—

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(a) immediately before 1 January 2013 securities are treated, as a result
of section 440A of ICTA (including as modified), as separate
holdings of a company for the purposes of corporation tax, and

(b) the securities that are comprised in those separate holdings (the “old
5holdings”) are, as at 1 January 2013, comprised in separate holdings
of the company as determined by the rules in sections 119 to 121 (the
“new holdings”).

(2) Each new holding is treated for the purposes of corporation tax on
chargeable gains as if it were a holding of the company with a base cost and
10an indexation allowance as at 1 January 2013 equal to the total of the base
costs and indexation allowances of the old holdings that are carried into the
new holding.

(3) In the case of securities (“new securities”) comprised in a new holding, the
amount of the base cost or indexation allowance of an old holding that is
15carried into the new holding is equal to the proportion which the new
securities derived from the old holding bear to all of the securities comprised
in the old holding.

(4) For the purpose of calculating the indexation allowance of a new holding in
respect of any period falling on or after 1 January 2013, it is to be assumed
20that, on that date, there had been a disposal of the holding for a
consideration of such amount as would secure that on the disposal neither a
gain nor a loss would accrue to the company.

(5) For the purposes of this paragraph—

(a) references to a base cost are—

(i) 25in the case of a section 104 holding, references to the amount
of qualifying expenditure within the meaning of section 110
of TCGA 1992, and

(ii) in the case of a 1982 holding, references to the amount of
expenditure that would fall to be deducted if the holding
30were disposed of,

(b) references to an indexation allowance are—

(i) in the case of a section 104 holding, references to the
indexation allowance as found in accordance with section 110
of TCGA 1992, and

(ii) 35in the case of a 1982 holding, references to the indexation
allowance within the meaning of Chapter 4 of Part 2 of that
Act,

(c) the base cost and the indexation allowance of an old holding are
calculated on the assumption that the holding is disposed of
40immediately before 1 January 2013,

(d) “section 104 holding” has the same meaning as in section 104(3) of
TCGA 1992, and

(e) “1982 holding” has the same meaning as in section 109 of that Act.

28 (1) This paragraph applies in a case where—

(a) 45section 210B(2) to (4) of TCGA 1992 would, but for this Part of this
Act, have applied in relation to a disposal and acquisition of section
440A securities, and

(b) the identification in accordance with those subsections of the section
440A securities disposed of with the section 440A securities acquired
50would have involved—

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(i) identifying securities disposed of before 1 January 2013 with
securities acquired on or after that date, or

(ii) identifying securities acquired before 1 January 2013 with
securities disposed of on or after that date.

(2) 5The securities disposed of are to be identified with the securities acquired (if
necessary applying the rules in section 210B(3) and (4) of TCGA 1992 and
subject to section 105(1) of that Act), and—

(a) in a case within sub-paragraph (1)(b)(i), the securities acquired are
not therefore to be comprised in a separate holding of securities
10within any of sections 119 to 121 of this Act, and

(b) in a case within sub-paragraph (1)(b)(ii), the securities acquired are
not therefore to be regarded as comprised in a separate holding of
securities within section 440A of ICTA (including as applied).

(3) In this paragraph “section 440A securities” has the same meaning as in
15section 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
subsequent accounting periods in accordance with section 45 of CTA 2010
20(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—

(a) section 436A of ICTA (including as applied by any provision of Part
252 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
subsequent accounting periods in accordance with section 45 of CTA 2010 as
30if 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
periods.

31 (1) 35The 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
section.

(2) 40A “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
under—

(a) 45section 85A or 89 of FA 1989, or

(b) any other provision of the Corporation Tax Acts.

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(4) The “appropriate” part of any unused life assurance trade losses is the
amount (if any) by which—

(a) the amount of the unused life assurance trade losses, exceeds

(b) the amount of unused losses arising to an insurance company in an
5accounting period ending before 1 January 2013 from gross roll-up
business (with the definition of “unused” in paragraph 29(2)
applying here).

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
10under 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
section 73 to the accounting period of the company beginning on 1 January
2013.

33 (1) 15This 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
relieved in an accounting period of an insurance company beginning on or
after 1 January 2013.

(2) 20Relief 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
(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
25deemed 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
for any accounting period (“the period concerned”) if the expenses are
reversed in the period concerned or any preceding accounting period.

30Relief 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
annuity business in an accounting period beginning on or after 1
January 2013, and

(b) 35the 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
accounting period if the company carried on life assurance business in that
period.

40Assets 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
fund of the company for the period of account ending immediately before 1
January 2013.