APPENDIX
First memorandum by the Commissioners
of Inland Revenue
OVERSEAS
INSURERS
(TAX
REPRESENTATIVES)
REGULATIONS
1999 (S.I. 1999/881)
1. The Board of Inland Revenue regret that for the
reasons set out below they are forwarding this instrument in breach
of the rule which requires laying of an instrument 21 days before
its provisions take effect.
2. The Regulations have been drawn up in accordance
with the vires contained in section 87 of the Finance Act 1998
(c. 36). This section imposed a requirement for an overseas insurer
in certain circumstances to have a UK tax representative who would
be responsible for providing information to the Inland Revenue
about the gains from life insurance policies made by the overseas
insurer's UK resident policy holders. The measure is due to come
into force on 6 April 1999.
3. The Regulations include the detail of the administrative
arrangements for the nomination, appointment and replacement of
tax representatives. They also provide that an overseas insurer
to whom section 87 of the Finance Act 1998 applies may apply to
be released from the requirement to have a tax representative
provided the insurer undertakes to provide certain information
about its policy holders directly to the Inland Revenue.
4. The Inland Revenue have drawn up the Regulations
through a lengthy and contentious process of liaison and consultation
with the main bodies representing overseas insurers. This met
a commitment that the then Paymaster General made in the Standing
Committee on the Finance Bill. It was essential that agreement
should be reached with the companies affected by the measure about
the way in which the Regulations would work in practice. The Inland
Revenue put out a draft of the Regulations for official consultation
in early December after discussions with the representative bodies.
This consultation continued through February this year and confirmed
the need to make a number of changes. Making the necessary amendments
to the draft and ensuring the formal agreement of the representative
bodies to those changes have further delayed the laying of the
Regulations.
5. Unfortunately, despite every effort being made
to complete the consultation within the allotted time, it was
not possible to reach a final agreement with the representative
bodies in time to give the Committee the full 21 days for review
of the Regulations before they come into force on 6 April 1999.
18th March 1999
Second memorandum by the Commissioners
of Inland Revenue
OVERSEAS
INSURERS
(TAX
REPRESENTATIVES)
REGULATIONS
1999 (S.I. 1999/881)
1. The Select Committee has requested submission
of a memorandum on the following point:
Where the Board have given
notice of their decision to withdraw their approval of the person
nominated by the overseas insurer on the ground that he no longer
fulfils the requirements of section 552A(7) of the Taxes Act [regulation
6(1)(a)], regulation 6(2)(a) provides that that person continues
to be the tax representative of the overseas insurer until they
give notice of their approval of the nomination of another person
or themselves appoint another person in his place. Given that
subsection (7) of section 552A (under which this instrument is
made) provides that a person shall not be a tax representative
unless certain requirements (as to residence or business establishment
in the United Kingdom) are satisfied, explain what authorises
the provision in regulation 6(2)(a) that a person nominated is
to continue to be a tax representative when he no longer satisfies
those requirements.
2. The Commissioners of Inland Revenue would first
like to make it clear that they accept that no person can be appointed
as, or continue to act as, an overseas insurer's tax representative
if he does not satisfy the requirements of section 552A(7) of
the Taxes Act. Regulation 6 is, therefore, at all times subject
to the provisions of section 552A(7). However, the giving of a
notice of the Board's decision to withdraw approval of an overseas
insurer's tax representative on the grounds that he no longer
satisfies the requirements of section 552A(7) does not conclusively
establish that those requirements are no longer satisfied. The
overseas insurer may appeal against that decision under regulation
13(1)(b) and, so long as the matter is in doubt, regulation 6(2)(a)
will operate to continue the appointment until there is either
a final decision in the appeal or, before such a decision is given,
the overseas insurer nominates another person and the Board give
their approval to such a nomination.
3. Alternatively, the overseas insurer may decide
not to appeal formally while still disputing the correctness of
the grounds relied on by the Board. In that case too, the appointment
will continue until the nomination of another tax representative
has been approved by the Board.
4. While it is a question of fact whether a person
satisfies the requirements of section 552A(7) at any particular
time, the Board submit that it is a legitimate exercise of the
power contained in section 552A(9)(f) to require a person to continue
as an overseas insurer's tax representative so long as there is
a doubt whether or not those requirements are satisfied.
26 April 1999
Third memorandum by the Commissioners
of Inland Revenue
OVERSEAS
INSURERS
(TAX
REPRESENTATIVES)
REGULATIONS
1999 (S.I. 1999/881)
1. The Select Committee has requested submission
of a further memorandum on the following point:
The Department, in their
memorandum of 26 April, submit that it is a legitimate exercise
of the power contained in section 552A(9)(f) of the Taxes Act
to require a person to continue as an overseas insurer's tax representative
so long as there is a doubt as to whether or not the requirements
of section 552A(7) are satisfied. In relation to a case where
there is no doubt that the requirements are not satisfied and
accordingly the overseas insurer does not wish to appeal against
the Board's decision or to dispute the correctness of the grounds
relied on by the Board, explain whether regulation 6(2)(a) has
the effect that a person can continue to be a tax representative
when he no longer satisfies those requirements; and, in particular,
explain how the supplemental power conferred by section 552A(9)(f)
to make provision with respect to the termination of a person's
appointment as a tax representative authorises a provision which
contradicts section 552A(7).
2. The Commissioners of Inland Revenue have conceded,
and would assert, that no person can be appointed as, or continue
to act as, an overseas insurer's tax representative if he does
not satisfy the requirements of section 552A(7) of the Taxes Act.
This means that, in a case where the facts are not in dispute,
regulation 6(2)(a) does not have the effect that a person who
no longer satisfies these requirements can continue to be a tax
representative. The Commissioners do not contend that the power
conferred by section 552A(9)(f) authorises a provision which contradicts
section 552A(7).
3. While this could have been made clear by stating
explicitly in the Regulations that regulation 6(2)(a) was subject
to section 552A(7) of the Taxes Act, it is understood that it
would have been both bad drafting practice and ultra vires
for the Commissioners to have done so, since it is axiomatic that
the Regulations cannot override primary legislation. Accordingly
regulation 6(2)(a) only has effect in situations where, notwithstanding
that the Board have given notice under regulation 6(1)(a), doubts
remain as to whether or not the requirements of section 552A(7)
are no longer satisfied.
10 May 1999
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