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Amendment of return where general insurance business of foreign company accounted for on non-annual basis |
| | 14. After section 755A of the Taxes Act 1988 there shall be inserted-
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| "Amendment of return where general insurance business of foreign company accounted for on non-annual basis. |
755B. - (1) This section applies where-
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(a) a controlled foreign company carries on general insurance business in an accounting period; |
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(b) an amount of the company's chargeable profits, and an amount of its creditable tax (if any), for that accounting period falls to be apportioned under section 747(3) to a company resident in the United Kingdom ("the UK company"); |
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(c) the UK company delivers a company tax return for that one of its accounting periods in which the controlled foreign company's accounting period ends; and |
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(d) in making or amending the return, the UK company has regard to accounts of the controlled foreign company drawn up using a method falling within subsection (2) below. |
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(2) The methods which fall within this subsection are-
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(a) the method described in paragraph 52 of Schedule 9A to the Companies Act 1985 (which provides for a technical provision to be made in the accounts which is later replaced by a provision for estimated claims outstanding); and |
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(b) any method which would have fallen within paragraph (a) above, had final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 52 of that Schedule, taken place, and been required to take place, no later than the end of the year referred to in that sub-paragraph as the third year following the underwriting year. |
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(3) Where this section applies-
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(a) the UK company may make any amendments of its company tax return arising from the replacement of the technical provision in the controlled foreign company's accounts at any time within twelve months from the date on which the provision was replaced; and |
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(b) notice of intention to enquire into the return under paragraph 24 of Schedule 18 to the Finance Act 1998 may be given at any time up to two years from that date (or at any later time in accordance with the general rule in sub-paragraph (3) of that paragraph). |
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(4) If, in a case where this section applies, the accounts of the controlled foreign company are drawn up using a method falling within paragraph (b) of subsection (2) above-
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(a) the controlled foreign company, and |
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(b) any person with an interest in the controlled foreign company, |
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shall be treated for the purposes of this section as if final replacement of the technical provision, as described in sub-paragraph (4) of paragraph 52 of Schedule 9A to the Companies Act 1985, had taken place at, and been required to take place no later than, the end of the year referred to in that sub-paragraph as the third year following the underwriting year.
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(5) Regulations under section 755C may make provision with respect to the determination of the amount of the provision by which the technical provision is to be treated as replaced in cases falling within subsection (4) above.
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(6) In this section "general insurance business" means insurance business which is general business, as defined in section 1 of the Insurance Companies Act 1982."
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Application of Chapter where general insurance business of foreign company accounted for on non-annual basis. |
| | 15. After section 755B of the Taxes Act 1988 there shall be inserted-
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| "Application of Chapter where general insurance business of foreign company accounted for on non-annual basis. |
755C. - (1) The Treasury may by regulations provide for the provisions of this Chapter to have effect with prescribed modifications in any case where a non-resident company-
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(a) carries on general insurance business; and |
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(b) draws up accounts relating to that business using a method falling within subsection (2) of section 755B. |
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(2) Regulations under subsection (1) above may-
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(a) make different provision for different cases; |
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(b) make provision having effect in relation to accounting periods of non-resident companies ending not more than one year before the date on which the regulations are made; and |
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(c) contain such supplementary, incidental, consequential and transitional provision as the Treasury may think fit. |
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(3) In this section-
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"general insurance business" has the same meaning as in section 755B; |
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"non-resident company" means a company resident outside the United Kingdom; |
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"prescribed" means prescribed in regulations under this section." |
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Section 756 |
| | 16. - (1) Section 756 of the Taxes Act 1988 (interpretation and construction of Chapter IV) shall be amended as follows.
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(2) In subsection (1), after "In this Chapter" there shall be inserted the following definition-
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""company tax return" means a return required to be made under Schedule 18 to the Finance Act 1998;". |
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Paragraph 1 of Schedule 24 |
| | 17. - (1) In Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies) paragraph 1 shall be amended as follows.
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(2) Sub-paragraph (3A) (assumption for applying provisions of Schedule 24 which refer to the first accounting period for which a direction is given or which is an ADP exempt period in cases where, as respects the accounting period in question and any earlier ones, no direction has been given and it has not been established that there is an ADP exempt period) shall be amended in accordance with sub-paragraphs (3) to (5) below.
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(3) In paragraph (a) (necessity to determine the chargeable profits) after "to determine" there shall be inserted "in the case of any person".
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(4) In paragraph (b) (conditions obtaining at the time in question)-
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(a) for sub-paragraph (i) (no direction given) there shall be substituted- |
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"(i) it has not been established in the case of that person that that or any earlier accounting period of the company is an accounting period in respect of which an apportionment under section 747(3) falls to be made, and"; and
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(b) in sub-paragraph (ii) (not established that there is an ADP exempt period) after "it has not been established" there shall be inserted "in the case of that person". |
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(5) For the words following paragraph (b) (assumption for purpose of the provisions in question that the accounting period is the first for which a direction is given or which is an ADP exempt period) there shall be substituted-
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" in determining the chargeable profits of the company for the accounting period mentioned in paragraph (a) above, it shall be assumed, for the purposes of those provisions of paragraphs 2 and 10 below which refer to the first accounting period in respect of which an apportionment under section 747(3) falls to be made or which is an ADP exempt period, that that period (but not any earlier period) is an accounting period in respect of which such an apportionment falls to be made or which is an ADP exempt period."
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(6) Sub-paragraph (4) (assumption for applying provisions of Schedule 24 which refer to the first accounting period for which a direction is given in cases where, as respects the accounting period in question and any earlier ones, no direction has been given) shall be amended in accordance with sub-paragraphs (7) to (9) below.
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(7) In paragraph (a) (necessity to determine chargeable profits) after "to determine" there shall be inserted "in the case of any person".
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(8) For paragraph (b) (no direction given) there shall be substituted-
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"(b) at that time it has not been established in the case of that person that that or any earlier accounting period of the company is an accounting period in respect of which an apportionment under section 747(3) falls to be made,". |
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(9) For the words following paragraph (b) (assumption for the purpose of the provisions in question that the accounting period is the first for which a direction is given) there shall be substituted-
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" in determining the chargeable profits of the company for the accounting period mentioned in paragraph (a) above, it shall be assumed, for the purposes of those provisions of paragraph 9 below which refer to the first accounting period in respect of which an apportionment under section 747(3) falls to be made, that such an apportionment falls to be made in respect of that period (but not in respect of any earlier period)."
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Paragraph 2 of Schedule 24 |
| | 18. In paragraph 2(1) of Schedule 24 to the Taxes Act 1988 (foreign company assumed to become resident in UK at beginning of first accounting period in respect of which a direction is given or which is an ADP exempt period)-
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(a) in paragraph (a), for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made"; and |
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(b) in the words following paragraph (b), for "a direction is given" there shall be substituted "an apportionment falls to be made". |
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Paragraph 4 of Schedule 24 |
| | 19. - (1) Paragraph 4 of Schedule 24 to the Taxes Act 1988 (assumption that claims or elections giving maximum relief have been made, subject to notice to the contrary) shall be amended as follows.
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(2) In sub-paragraph (1A)(a) (sub-paragraph (2) to apply to accounting period of foreign company in respect of which a direction is given) for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made".
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(3) In sub-paragraph (2) (notice to be given to the Board at any time not later than the expiry of the appropriate period etc)-
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(a) for "given to the Board" there shall be substituted "given to an officer of the Board"; and |
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(b) for "the appropriate period" there shall be substituted "the period of twenty months following the end of the accounting period". |
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(4) In consequence of sub-paragraph (3)(b) above, sub-paragraph (2A) shall cease to have effect.
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(5) In sub-paragraph (3) (majority interest in foreign company) in paragraph (b) for "an assessment" there shall be substituted "any liability".
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(6) In sub-paragraph (3A) (application of sub-paragraph (3) to ADP exempt periods)-
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(a) in paragraph (a), for "a direction had been duly given under section 747(1)" there shall be substituted "an apportionment under section 747(3) had fallen to be made"; |
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(b) for paragraph (b) there shall be substituted- |
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"(b) such apportionments as are mentioned in sub-paragraph (3) above had been made and such liabilities as are mentioned in that sub-paragraph had arisen." |
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Paragraph 9 of Schedule 24 |
| | 20. - (1) Paragraph 9 of Schedule 24 to the Taxes Act 1988 (losses in pre-direction accounting periods) shall be amended as follows.
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(2) For "pre-direction", wherever occurring, there shall be substituted "pre-apportionment".
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(3) In sub-paragraph (1) (which provides that, subject to sub-paragraph (2), the paragraph applies where the foreign company incurs a loss in an accounting period preceding the first in respect of which a direction is given etc)-
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(a) the words "Subject to sub-paragraph (2) below," shall cease to have effect; and |
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(b) in paragraph (a), for "a direction is given under section 747(1)" there shall be substituted "an apportionment under section 747(3) falls to be made". |
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(4) Sub-paragraph (2) (which provides that the paragraph does not apply where a declaration is made under paragraph 11(3)) shall cease to have effect.
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(5) In sub-paragraph (3) (assumption that pre-direction period was first accounting period in respect of which a direction was given) for "a direction was given under section 747(1)" there shall be substituted "an apportionment under section 747(3) fell to be made".
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(6) For sub-paragraph (4) (claim to be made by notice given to Board within 60 days of notice under section 753(1) or (3) relating to starting period etc) there shall be substituted-
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"(4) A claim under sub-paragraph (3) above shall be made by notice given to an officer of the Board within the period of twenty months following the end of the starting period or within such longer period as the Board may in any particular case allow."
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(7) Sub-paragraph (5) (which provides for an assumption that Chapter IV was in force before the beginning of the first of the pre-direction periods, and which is of no further practical utility) shall cease to have effect.
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(8) Sub-paragraph (6) (no account to be taken of declaration under paragraph 11(3)) shall cease to have effect.
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(9) At the end of the paragraph there shall be added-
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"(7) Nothing in-
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(a) paragraph 10 of Schedule 18 to the Finance Act 1998 (claims or elections in company tax returns), or |
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(b) Schedule 1A to the Management Act (claims or elections not included in returns), |
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shall apply, whether by virtue of section 754 or otherwise, to a claim under sub-paragraph (3) above."
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