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Finance Bill
Schedule 9 — Insurance companies: transfers etc

149

 

444ABA  

 Relevant non-transferred assets

(1)   

For the purposes of section 444AB the relevant amount in relation to

assets that are relevant non-transferred assets is—equation: plus[times[char[F],char[V],char[A]],minus[times[char[R],char[V],char[A]]]]

where—

FVA is the fair value of the assets on the transfer date, and

5

RVA is the recognised value of the assets.

(2)   

For the purposes of this section and section 444ABB—

(a)   

the recognised value of any assets which, immediately before

the transfer date, are held by the transferor in a non-profit

fund which is not a Form 14 line 51 fund is the relevant Form

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13 value of those assets, and

(b)   

the recognised value of any other assets is the appropriate

fraction of the relevant Form 13 value of those assets.

(3)   

For the purposes of subsection (2) above a non-profit fund is a Form

14 line 51 fund if an amount in respect of the fund is shown (or

15

treated as shown) in line 51 of Form 14 in the periodical return of the

transferor covering the relevant period of account.

(4)   

For the purposes of subsection (2) above the relevant Form 13 value

of any assets is the value which is shown (or treated as shown) in

respect of the assets in Form 13 in the periodical return of the

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transferor covering the relevant period of account (ignoring lines 91

to 99 of that Form).

(5)   

For the purposes of subsection (2)(b) above the appropriate fraction

isequation: plus[num[1.0000000000000000,"1"],minus[over[char[A],char[B]]]]

   

where—

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A is the amount shown (or treated as shown) in line 51 of Form

14 in the periodical return of the transferor covering the

relevant period of account in respect of the fund in which,

immediately before the transfer date, the assets are held by

the transferor, increased or reduced as mentioned in

30

subsection (6) below, and

B is the amount shown (or treated as shown) in line 89 of Form

13 in that periodical return in respect of that fund.

(6)   

The increase or reduction referred to in the definition of A in

subsection (5) above is any increase or decrease deemed to be

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brought into account by section 83YA(3) or (4) of the Finance Act

1989 in respect of the fund for the relevant period of account.

(7)   

See section 444AA for the meaning of “the transfer date”, and section

444AB for the meaning of “the relevant period of account”, in this

section.

40

444ABB  

Retained assets

(1)   

For the purposes of section 444AB the relevant amount in relation to

assets that are retained assets is the lesser of FVA and UTA, where—

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

150

 

(a)   

FVA is the fair value of the assets on the transfer date, and

(b)   

UTA is the amount by which the fair value of the assets of the

long-term insurance fund of the transferor immediately

before the transfer date exceeds the amount shown (or

treated as shown) in line 32 of Form 40 in the periodical

5

return of the transferor covering the transfer date.

(2)   

See section 444AA for the meaning of “the transfer date” in this

section.

444ABC  

 Transfer scheme transferring part of business: transferor

(1)   

This section applies where an insurance business transfer scheme

10

has effect to transfer part (but not the whole or substantially the

whole) of the long-term business of a person (“the transferor”) to

another person (“the transferee”) and the condition in subsection (2)

below is met.

(2)   

That condition is that any of the assets of the transferor’s long-term

15

insurance fund which are transferred from the transferor to the

transferee by the insurance business transfer scheme are not,

immediately after their transfer—

(a)   

if the transferee is an insurance company, assets of the

transferee’s long-term insurance fund, or

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(b)   

if the transferee is not an insurance company, assets of a with-

profits fund of the transferee,

   

(“relevant non-transferred assets”).

(3)   

The relevant amount in relation to the relevant non-transferred

assets (see subsection (4) below) is to be taken into account under

25

section 83(2) of the Finance Act 1989 as an increase in value of the

assets of the long-term insurance fund of the transferor for the period

of account covering the transfer date.

(4)   

The relevant amount in relation to the relevant non-transferred

assets is—equation: plus[times[char[F],char[V],char[A]],minus[times[char[B],char[T],char[O]]]]

30

where

FVA is the fair value of the assets on the transfer date, and

BTO is any amount brought into account in respect of the assets

as a business transfer-out.

(5)   

See section 444AA for the meaning of “the transfer date” in this

35

section.”

      (2)  

In section 432E(2A) of ICTA (apportionments: participating funds)—

(a)   

before “444AF(2)” insert “444AB, 444ABC,”, and

(b)   

after paragraph (a) insert—

“(aa)   

section 444AB or 444ABC of this Act;”.

40

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

151

 

Transferor’s period of account including transfer

5          

In ICTA, after section 444ABC (inserted by paragraph 4) insert—

“444ABD 

 Transferor’s period of account including transfer

(1)   

Any profits representing the amount by which—

(a)   

the value of the liabilities transferred by an insurance

5

business transfer scheme, exceeds

(b)   

the value of the assets transferred by the insurance business

transfer scheme shown (or treated as shown) in line 32 of the

periodical return of the transferor for the period of account of

the transferor including the transfer date,

10

   

are to be taken into account as profits of that period of account.

(2)   

Any loss representing the amount by which—

(a)   

the value of the liabilities transferred by an insurance

business transfer scheme, falls short of

(b)   

the value of the assets transferred by the insurance business

15

transfer scheme shown (or treated as shown) in line 32 of the

periodical return of the transferor for the period of account of

the transferor including the transfer date,

   

is to be taken into account as a loss of that period of account.

(3)   

See section 444AA for the meaning of “the transfer date” in this

20

section.”

Transfer schemes: taxing the transferee

6     (1)  

In ICTA, for section 444AC substitute—

“444AC  

 Transfer schemes transferring whole of business: reduction in

income of transferee

25

(1)   

This section applies where an insurance business transfer scheme

has effect to transfer the whole, or substantially the whole, of the

long-term business of a person (“the transferor”) to another person

(“the transferee”) and conditions A and B are met.

(2)   

Condition A is that the transferor did not carry on life assurance

30

business that is mutual business during the relevant period of

account.

(3)   

Condition B is that an amount is shown (or treated as shown) in line

13 of Form 14 in the periodical return of the transferor covering the

relevant period of account.

35

(4)   

The amount which (apart from this section) would be regarded as

other income of the transferee for the purposes of section 83(2)(e) of

the Finance Act 1989 for the period of account of the transferee which

includes the transfer date is to be reduced by an amount equal to the

transferred surplus.

40

(5)   

In subsection (4) above “the transferred surplus” means the amount

shown (or treated as shown) in line 13 of Form 14 in the periodical

return of the transferor covering the relevant period of account.

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

152

 

(6)   

See section 444AA for the meaning of “the transfer date”, and section

444AB for the meaning of “the relevant period of account”, in this

section.

444ACZA 

 Transfer schemes transferring part of business: reduction in

income of transferee

5

(1)   

This section applies where an insurance business transfer scheme

has effect to transfer part (but not the whole or substantially the

whole) of the long-term business of a person (“the transferor”) to

another person (“the transferee”) and the condition in subsection (2)

below is met.

10

(2)   

The condition is that the transferor did not carry on life assurance

business that is mutual business during the period of account of the

transferor covering the transfer date.

(3)   

The amount which (apart from this section) would be regarded as

other income of the transferee for the purposes of section 83(2)(e) of

15

the Finance Act 1989 for the period of account of the transferee which

includes the transfer date is to be reduced by an amount equal to the

transferred surplus.

(4)   

In subsection (4) above “the transferred surplus” means such part of

the amount shown (or treated as shown) in line 13 of Form 14 in the

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periodical return of the transferor covering the last period of account

of the transferor ending before the transfer date as it is just and

reasonable to regard as being attributable to the transfer.

(5)   

See section 444AA for the meaning of “the transfer date” in this

section.”

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      (2)  

In section 83(2A) of FA 1989 (receipts not to be taken into account), omit

paragraph (b).

Repeal of section 444AD

7     (1)  

In ICTA, omit section 444AD (transfers of business: modification of section

83(2B) of FA 1989).

30

      (2)  

In section 83YA(7) of FA 1989 (changes in value of assets brought into

account: transfer-in amount), for the words after “if” substitute “a transfer

takes place in the following period of account; and the amount of the

transfer-in amount for the previous period of account is any amount by

which—

35

(a)   

the fair value of such of the assets of the long-term insurance

fund of the company immediately after the transfer as were

assets of the transferor’s long-term insurance fund

immediately before the transfer, exceeds

(b)   

the amount of any business transfer-in brought into account

40

in accordance with section 83(2)(e) in relation to the transfer.”

Transfer schemes: anti-avoidance

8     (1)  

In ICTA, before section 444AF (and the italic cross-heading before it)

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

153

 

insert—

“444AEA 

 Transfer schemes: anti-avoidance rule

(1)   

This section applies where—

(a)   

as a result of the whole or any part of transfer scheme

arrangements involving the transfer of long-term business

5

from one person (“the transferor”) to another (“the

transferee”) a Case I advantage is obtained by the transferor

or the transferee (or by both), and

(b)   

the sole or main purpose, or one of the main purposes, of the

whole or any part of the transfer scheme arrangements is the

10

obtaining of that Case I advantage.

(2)   

In subsection (1) above “transfer scheme arrangements” means an

insurance business transfer scheme (“the relevant transfer scheme”)

together with any relevant associated operations.

(3)   

If a Case I advantage is obtained by the transferor (see subsection (1)

15

of section 444AEB), the amount of the transferor’s Case I advantage

(see subsection (2) of that section) is to be taken into account as an

increase in value of the assets of the long-term insurance fund of the

transferor for the period of account of the transferor covering the

transfer date.

20

(4)   

If a Case I advantage is obtained by the transferee (see subsection (1)

of section 444AEC), the amount of the transferee’s Case I advantage

(see subsection (2) of that section) is to be taken into account as an

increase in value of the assets of the long-term insurance fund of the

transferee for the first period of account of the transferee ending after

25

the transfer date.

(5)   

In this section and sections 444AEB and 444AEC “relevant associated

operations”, in relation to the relevant transfer scheme, means—

(a)   

any other insurance business transfer scheme,

(b)   

any contract of reinsurance,

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(c)   

any reconstruction or amalgamation involving the transferor,

a dependant of the transferor which is an insurance

undertaking or the transferee, or

(d)   

any surplus-increasing transfer of assets,

   

which is effected in connection with the relevant transfer scheme.

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(6)   

In subsection (5) above—

“dependant” and “insurance undertaking” have the same

meaning as in the Insurance Prudential Sourcebook, and

“surplus-increasing transfer of assets” means a transfer of assets

of the transferor’s long-term insurance fund to the transferee

40

which is not brought into account for any period of account

of the transferee but increases the amount of total surplus

shown in line 39 of Form 58 in any periodical return of the

transferee.

(7)   

See section 444AA for the meaning of “the transfer date” in this

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section.

 

 

 
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