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(5) After that paragraph insert— | |
“Quantitative restrictions not to apply to ordinary charters | |
89A (1) Paragraph 94 to 102, and paragraph 89(1) so far as relating to those | |
paragraphs, do not apply in the following cases. | |
(2) The first case is where the ship is chartered out by a person who is | 5 |
responsible— | |
(a) for the operation of the ship, including the appointment of | |
the master and those members of the crew engaged in | |
navigation, throughout the period of the charter, and | |
(b) for defraying all expenses in connection with the ship | 10 |
throughout that period, or substantially all such expenses | |
other than those directly incidental to a particular voyage | |
or to the employment of the ship during that period. | |
For the purposes of this sub-paragraph a person is “responsible” if | |
he is responsible as principal or if he appoints another person, | 15 |
other than the lessee or a person connected with the lessee, to be | |
responsible in his place. | |
(3) The second case is where— | |
(a) the ship is chartered out by a person acting in the course of | |
a trade that consists of, or to a significant extent includes, | 20 |
operating ships, and | |
(b) the conditions in sub-paragraph (4) are met. | |
(4) Those conditions are— | |
(a) that the period of the charter does not exceed seven years, | |
and there is no provision or agreement under which it | 25 |
could be extended beyond seven years; | |
(b) that the period of the charter, together with any other | |
periods in the same ten years during which the ship is | |
chartered out to the lessee or a person connected with him, | |
does not exceed seven years in total; | 30 |
(c) that there are no arrangements under which the lessee or a | |
person connected with him may acquire the ship, whether | |
directly or indirectly, from the lessor. | |
In paragraph (b) “the same ten years” means any period of ten | |
years that includes the period of the charter mentioned in that | 35 |
paragraph. | |
(5) References in this paragraph to the period of a charter are to the | |
term specified in the lease or, if longer, the actual period during | |
which the ship is chartered. | |
(6) Section 839 of the Taxes Act 1988 (connected persons) applies for | 40 |
the purposes of this paragraph.”. | |
Consequential amendments | |
2 (1) In paragraph 41(4) of that Schedule (the requirement not to enter into tax | |
avoidance arrangement: exemption for finance leases)— | |
(a) in the first sentence omit “finance”; | 45 |
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| |
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| |
(b) for the second sentence substitute— | |
“In this sub-paragraph “lease”, and “lessor” in relation to a | |
lease, have the meaning given by paragraph 89(2).”. | |
(2) In paragraph 147 (index of defined expressions)— | |
(a) omit the entry for “finance lease (and lessor and lessee) (in Part X)”; | 5 |
(b) insert at the appropriate place— | |
“lease (and lessor and lessee) (in Part X) paragraph 89(2)”. | |
Commencement and temporary provision | |
3 (1) Subject to paragraph 4(2), the amendments made by paragraphs 1 and 2 | |
apply in relation to any lease entered into on or after 19th December 2002. | 10 |
(2) In sub-paragraph (4)(b) of the paragraph 89A inserted by paragraph 1(5) | |
above, the reference to any other periods during which the ship is chartered | |
out does not include any period during which it is chartered out under a | |
lease entered into before 19th December 2002. | |
4 (1) This paragraph applies in relation to any lease entered into on or after 19th | 15 |
December 2002 and before 16 April 2003. | |
(2) Part 10 of the Schedule 22 to the Finance Act 2000 (c. 17) has effect as if, | |
instead of the paragraph inserted after paragraph 89 by paragraph 1(5) | |
above, the following paragraph were inserted— | |
“Exception for ordinary charters | 20 |
89A (1) Paragraph 89(1), and the provisions of this Part of this Schedule | |
listed there, do not apply in the following cases. | |
(2) The first case is where the ship is chartered out by a person who is | |
responsible— | |
(a) for the operation of the ship, including the appointment of | 25 |
the master and those members of the crew engaged in | |
navigation, throughout the period of the charter, and | |
(b) for defraying all expenses in connection with the ship | |
throughout that period, or substantially all such expenses | |
other than those directly incidental to a particular voyage | 30 |
or to the employment of the ship during that period. | |
For the purposes of this sub-paragraph a person is “responsible” if | |
he is responsible as principal or if he appoints another person, | |
other than the lessee or a person connected with the lessee, to be | |
responsible in his place. | 35 |
(3) The second case is where— | |
(a) the ship is chartered out to another person (“the charterer”) | |
because of short-term over-capacity, | |
(b) the person chartering out the ship does so in the course of | |
a trade that consists of or includes operating ships, and | 40 |
(c) the conditions in sub-paragraph (4) are met. | |
(4) Those conditions are— | |
(a) that the period of the charter does not exceed three years, | |
and there is no provision or agreement under which it | |
could be extended beyond three years; | 45 |
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(b) that the period of the charter, together with any other | |
periods in the same five years during which the ship is | |
chartered out to the charterer or a person connected with | |
him, does not exceed three years in total; | |
(c) that neither the charterer nor any person connected with | 5 |
him has an option to purchase the ship. | |
(5) In sub-paragraph (4)(b)— | |
(a) the reference to any other periods during which the ship is | |
chartered out does not include any period during which it | |
is chartered out under a lease entered into before 19th | 10 |
December 2002; | |
(b) “the same five years” means any period of five years that | |
includes the period of the charter mentioned in that sub- | |
paragraph. | |
(6) References in this paragraph to the period of a charter are to the | 15 |
term specified in the lease or, if longer, the actual period during | |
which the ship is chartered. | |
(7) Section 839 of the Taxes Act 1988 (connected persons) applies for | |
the purposes of this paragraph.”. | |
(3) Paragraph 93(1) of that Schedule (certificates required to support claim by | 20 |
lessor) has effect as if after paragraph (a) there were inserted— | |
“(aa) that the lease is such that, by virtue of paragraph 89A | |
(exception for ordinary charters), paragraph 89(1) does not | |
apply, or”. | |
5 In paragraphs 3 and 4 “lease” means any arrangements that provide for a | 25 |
ship to be leased or otherwise made available by one person to another. | |
Schedule 33 | |
Section 169 | |
Insurance companies | |
Case I profits | |
1 (1) For section 82 of the Finance Act 1989 (c. 26) (calculation of profits of | 30 |
insurance company in respect of life assurance business when computed in | |
accordance with provisions applicable to Case I of Schedule D) substitute— | |
“82 Calculation of profits: bonuses etc | |
(1) This section and sections 82A and 82B below have effect where the | |
profits of an insurance company in respect of its life assurance | 35 |
business are, for the purposes of the Taxes Act 1988, computed in | |
accordance with the provisions of that Act applicable to Case I of | |
Schedule D. | |
(2) Any amounts which are allocated to policy holders or annuitants in | |
respect of a period of account are allowed as a deduction in | 40 |
calculating the profits for the period of account. | |
(3) For the purposes of subsection (2) above, an amount is allocated to | |
policy holders or annuitants if (but only if)— | |
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(a) bonus payments are made to them, | |
(b) reversionary bonuses are declared in their favour, or | |
(c) a reduction is made in the premiums payable by them. | |
(4) Where an amount is allocated to policy holders or annuitants for the | |
purposes of subsection (2) above, the amount of the allocation is— | 5 |
(a) in the case of bonus payments, the amount of the payments, | |
(b) in the case of declared reversionary bonuses, the amount of | |
the liabilities assumed by the company in consequence of the | |
declaration, and | |
(c) in the case of a reduction in premiums, the amount of the | 10 |
liabilities assumed by the company in consequence of the | |
reduction. | |
82A Calculation of profits: policy holders’ tax | |
(1) Tax expended on behalf of policy holders or annuitants is allowed as | |
a deduction in calculating the profits to the extent (but only to the | 15 |
extent) that regulations made by the Treasury so provide. | |
(2) The regulations may include provision for tax so expended to be so | |
allowed even if it is not brought into account. | |
(3) The regulations— | |
(a) may make different provision for different cases, and | 20 |
(b) may include provision having effect in relation to periods of | |
account during which they are made. | |
82B Unappropriated surplus on valuation | |
(1) This section applies in relation to a period of account of an insurance | |
company (“the period of account in question”) where— | 25 |
(a) at the end of the period of account in question the company | |
has an unappropriated surplus on valuation as shown in the | |
return deposited with the Financial Services Authority under | |
section 9.6 of the Prudential Sourcebook (Insurers) (an | |
“unappropriated surplus”), and | 30 |
(b) the company has not made an election in accordance with | |
Rule 4.1(6) of the Prudential Sourcebook (Insurers) covering | |
the period of account in question. | |
(2) Where the company did not have an unappropriated surplus at the | |
end of the period of account immediately preceding the period of | 35 |
account in question, so much of the unappropriated surplus at the | |
end of the period of account in question as is required to meet the | |
duty of fairness is allowed as a deduction in calculating the profits | |
for the period of account in question. | |
(3) Where the company did have an unappropriated surplus at the end | 40 |
of that immediately preceding period of account— | |
(a) if so much of the unappropriated surplus at the end of the | |
period of account in question as is required to meet the duty | |
of fairness exceeds so much of the unappropriated surplus at | |
the end of that immediately preceding period of account as | 45 |
was required to meet that duty, the excess is allowed as a | |
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| |
deduction in calculating the profits for the period of account | |
in question, but | |
(b) if so much of the unappropriated surplus at the end of that | |
immediately preceding period of account as was required to | |
meet the duty of fairness exceeds so much of the | 5 |
unappropriated surplus at the end of the period of account in | |
question as is required to meet that duty, the excess is to be | |
taken into account as a receipt of the period of account in | |
question. | |
(4) In arriving for the purposes of this section at the amount of the | 10 |
unappropriated surplus which is or was required to meet the duty of | |
fairness there is to be deducted the aggregate of amounts which— | |
(a) for periods of account ending before 14th March 1989 (and | |
the first notional period of account, within the meaning of | |
section 82 above as originally enacted) have been excluded, | 15 |
by virtue of section 433 of the Taxes Act 1988, as being | |
reserved for policy holders or annuitants, and | |
(b) have not before that date either been allocated to or expended | |
on behalf of policy holders or annuitants or been treated as | |
profits of an accounting period on ceasing to be so reserved. | 20 |
(5) References in this section to the company’s duty of fairness are to the | |
company’s duty to treat its policy holders and annuitants fairly with | |
regard to terminal bonuses.”. | |
(2) In section 83A(1) of the Finance Act 1989 (c. 26) (meaning of “brought into | |
account”), for “83” substitute “82A”. | 25 |
(3) In section 436(3)(a) of the Taxes Act 1988 (pension business: separate charge | |
on profits)— | |
(a) for “82 and 83” substitute “82 and 82B to 83AB”, and | |
(b) omit the words after “modifications”. | |
(4) In sections 439B(3)(a) and 441(4)(a) of the Taxes Act 1988 (life reinsurance | 30 |
business and overseas life insurance business: separate charge on profits)— | |
(a) for “82(1), (2) and (4) and 83” substitute “82 and 82B to 83AB”, and | |
(b) omit “and in particular with the omission of the words “and any | |
amounts of tax which are expended on behalf of” in section 82(1)(a)”. | |
(5) This paragraph has effect for periods of account beginning on or after 1st | 35 |
January 2003. | |
(6) In relation to the first period of account of an insurance company beginning | |
on or after that date, section 82B of the Finance Act 1989 (inserted by sub- | |
paragraph (1)) applies as if the references in it to so much of the | |
unappropriated surplus at the end of the immediately preceding period of | 40 |
account as was required to meet the company’s duty of fairness were to any | |
amount included in the closing liabilities of the period of account by virtue | |
of section 82(1)(b) of that Act as originally enacted. | |
2 (1) Section 83 of the Finance Act 1989 (receipts etc to be taken into account in | |
Case I computations) is amended as follows. | 45 |
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(2) For subsection (2) substitute— | |
“(2) There shall be taken into account as receipts of a period of account | |
amounts (so far as referable to that business) brought into account for | |
the period of account as— | |
(a) investment income receivable before deduction of tax, | 5 |
(b) an increase in the value of non-linked assets, | |
(c) an increase in the value of linked assets, or | |
(d) other income; | |
and if amounts (so far as so referable) are brought into account for a | |
period of account as a decrease in the value of non-linked assets or a | 10 |
decrease in the value of linked assets they shall be taken into account | |
as an expense of the period of account. | |
(2A) But subsection (2) above does not require to be taken into account as | |
receipts of a period of account so much of the amounts brought into | |
account as mentioned paragraphs (a) to (d) of that subsection for the | 15 |
period of account as— | |
(a) is entirely notional because an amount corresponding to it | |
would fall to be brought into account as an expense (for that | |
or any other period of account), | |
(b) is exempted by section 444AC(2) of the Taxes Act 1988 | 20 |
(transfers of business), or | |
(c) consists of interest paid under section 826 of the Taxes Act | |
1988 (interest on tax overpaid) in respect of a repayment or | |
payment relating to an accounting period of the company | |
ending before 1st July 1999; | 25 |
but, subject to that, the whole of the amounts so brought into account | |
for a period of account shall be taken into account as receipts of the | |
period of account. | |
(2B) If any assets of the company’s long-term insurance fund are | |
transferred by the company in a period of account so that they cease | 30 |
to be assets of that fund, but the transfer is not brought into account | |
as part of total expenditure for the period of account, the fair value | |
of the assets at the time of the transfer shall be deemed to be brought | |
into account for the period of account as an increase in the value of | |
the assets of that fund unless the assets are excluded from this | 35 |
subsection by— | |
(a) subsection (2C) or (2D) below, or | |
(b) section 444AD of the Taxes Act 1988 (transfers of business). | |
(2C) Assets transferred to discharge liabilities in respect of deposits | |
received from reinsurers or arising out of insurance operations, | 40 |
debenture loans or amounts borrowed from credit institutions are | |
included in subsection (2B) above only if the deposits, loans or | |
amounts borrowed— | |
(a) were brought into account for the period of account, but | |
(b) were not taken into account as receipts of the period of | 45 |
account under subsection (2) above. | |
(2D) Assets are excluded from subsection (2B) above if they are | |
transferred for at least their fair value and the consideration for their | |
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transfer, when received, forms part of the company’s long-term | |
insurance fund.”. | |
(3) In subsection (3)— | |
(a) for “that business in a case where an amount is” substitute “its life | |
assurance business in a case where assets are”, | 5 |
(b) after “taken into account” insert “under subsection (2) above”, and | |
(c) for “that fund within subsection (2)(b) above” substitute “the long- | |
term insurance fund”. | |
(4) In subsection (4), for paragraph (c) substitute— | |
“(c) represents so much of the proceeds of the disposal of an asset | 10 |
of the long-term insurance fund as does not exceed its fair | |
value or an asset acquired for at least its fair value which is | |
added to that fund.”. | |
(5) In subsection (5), omit paragraph (b) and the word “but” before it. | |
(6) In subsection (6)(c), omit “unless the reinsurer under the contract falls within | 15 |
section 439A of the Taxes Act 1988 (pure reinsurance)”. | |
(7) Subsection (8) is amended as follows. | |
(8) After the definition of “demutualisation” insert— | |
““fair value”, in relation to assets, means the amount which would be | |
obtained from an independent person purchasing them or, if the | 20 |
assets are money, its amount;”. | |
(9) In the definition of “total reinsurance”, omit “before the making of the | |
contract of reinsurance (or, in a case where there are two or more contracts | |
of reinsurance, the last of them)”. | |
(10) In the sidenote, for “brought” substitute “taken”. | 25 |
(11) Sub-paragraph (6) has effect in relation to contracts of reinsurance made on | |
or after 9th April 2003; and sub-paragraph (9) has effect in relation to | |
reinsurance effected by a single contract made on or after that date or by two | |
or more contracts each of which is made on or after that day. | |
(12) But, subject to that, this paragraph has effect for periods of account | 30 |
beginning on or after 1st January 2003. | |
3 (1) In the Finance Act 1989 (c. 26), after section 83 insert— | |
“83ZA Contingent loans | |
(1) For the purposes of this section a contingent loan is made to an | |
insurance company if— | 35 |
(a) a deposit is received by the company from a reinsurer or | |
arises out of insurance operations of the company, | |
(b) a debenture loan is made to the company, or | |
(c) an amount is borrowed by the company from a credit | |
institution, | 40 |
and the deposit, debenture loan or amount borrowed is taken into | |
account as a receipt of the company under section 83(2) above. | |
(2) For the purposes of this section the time when a contingent loan is | |
made to an insurance company is the time when the assets | |
constituting the deposit, debenture loan or amount borrowed are | 45 |
received by the company. | |
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