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Finance Bill
Schedule 10 — Insurance companies: miscellaneous

161

 

(a)   

during a period of account consisting of the period of account

of the transferor ending immediately before the time when

the transfer has effect, and

(b)   

(where that does not cause there to be three periods of

account during which it carried on such business) during the

5

one or (as the case may require) two periods of account of the

transferor preceding that period of account (so as to cause

there to be three).

(11)   

Where, during a preceding period of account to which subsection (7)

above applies (including one to which it applies by virtue of

10

paragraph (10) above), an insurance business transfer scheme had

effect to transfer to the company long-term business of another

insurance company, the references in subsection (7) above to

bringing into account include (so far as appropriate) bringing into

account by the other company.

15

83ZB    

Charge in relevant period of account

(1)   

The relevant amount (see subsection (2) below) is to be treated for the

purposes of section 83(2) above as brought into account by the

company for the relevant period of account as an increase in the

value of assets.

20

(2)   

The relevant amount is—

(a)   

where the condition in paragraph (a) of subsection (4) of

section 83ZA above is met, the amount brought into account

as a transfer to non-technical account from the non-profit

fund for the relevant period of account, and

25

(b)   

in a case where that condition is not met but the condition in

paragraph (b) of that subsection is met, the amount by which

that amount exceeds the relevant limit.

(3)   

The relevant limit is the lesser of—

(a)   

125% of the relevant mean (see subsection (7) of that section),

30

and

(b)   

the aggregate of the amounts brought into account as

mentioned in subsection (3)(c) of that section in the relevant

period of account and any preceding periods of account less

the aggregate of amounts treated as brought into account by

35

subsection (1) in any preceding periods of account.

83ZC    

Deduction in subsequent periods of account

(1)   

The company is entitled to a deduction of the appropriate amount in

computing profits of the company’s life assurance business in

accordance with the provisions of Case I of Schedule D for any

40

period of account following the relevant period of account in which

any payment made by the company under the loan relationship is

brought into account as part of total expenditure in the revenue

account for the non-profit fund.

(2)   

The appropriate amount is the lesser of—

45

(a)   

the amounts paid under the loan relationship and brought

into account as part of total expenditure in the revenue

account for the non-profit fund, and

(b)   

the amount determined under subsection (3) below.

 

 

Finance Bill
Schedule 10 — Insurance companies: miscellaneous

162

 

(3)   

That amount is—equation: over[times[char[R],char[A]],times[char[N],char[Y]]]

   

where—

RA is the relevant amount under section 83ZB above (see

subsection (2) of that section), and

NY is the number of years, that is the number of years (rounded

5

up where not a whole number to the next whole number) in

the period—

(a)   

beginning with the relevant period of account, and

(b)   

ending with the last date on which it is expected that

the company will make a payment under the loan

10

relationship which could be brought into account as

part of total expenditure in the revenue account for

the non-profit fund.

(4)   

But if the aggregate of what would otherwise be the appropriate

amount and any amounts which constituted the appropriate amount

15

for earlier periods of account in relation to the relevant financing

arrangement would exceed the amount which is the relevant

amount, the appropriate amount is the amount of that excess.”

      (2)  

Where, at the end of the period of account of an insurance company

immediately preceding the first period of account of the company for which

20

the amendment made by sub-paragraph (1) has effect (“the initial period of

account”), the company has unrepaid contingent loan liabilities, sections

83ZA to 83ZC of FA 1989 (as substituted by sub-paragraph (1)) have effect

in relation to the initial period of account as if—

(a)   

the company entered into a relevant financing arrangement in that

25

period of account,

(b)   

the amount of the unrepaid contingent loan liabilities were amounts

in respect of a money debt referable to the company’s life assurance

business which are brought into account in relation to a non-profit

fund as part of total income for that period of account, and

30

(c)   

the reference in section 83ZA(4)(a) to the relevant financing

arrangement having been entered into were to the company not

having unrepaid contingent liabilities.

      (3)  

For the purposes of sub-paragraph (2)—

(a)   

subsection (3) of section 83ZA of FA 1989 (as originally enacted)

35

applies for determining whether the company has unrepaid

contingent liabilities, and

(b)   

the amount of the unrepaid contingent loan liabilities is the amount

given by subsection (7) of that section (as it has effect before its

repeal) for the period of account preceding the initial period of

40

account.

2     (1)  

In section 444AE of ICTA (modification of section 83ZA of FA 1989), for

subsection (2) substitute—

“(2)   

If the insurance business transfer scheme has effect to transfer a

relevant financing arrangement (within the meaning of section 83ZA

45

of the Finance Act 1989), it is to be treated as having been entered into

by the transferee in the period of account of the transferee that

includes the transfer if amounts in respect of the money debt

 

 

Finance Bill
Schedule 10 — Insurance companies: miscellaneous

163

 

concerned are brought into account in relation to a non-profit fund

as part of total income for that period of account.”

      (2)  

In section 83(2A) of FA 1989 (receipts to be taken into account as receipts of

a period of account where profits computed in accordance with Case I of

Schedule D), after paragraph (ab) (inserted by paragraph 5(3)) insert—

5

“(ac)   

consists of amounts brought into account in respect of a

money debt where the requirements in paragraphs (a) and (b)

of section 83ZA(3) below are satisfied in relation to the

money debt;”.

      (3)  

In FA 1996, omit paragraph 2(2A) of Schedule 11.

10

“Structural” assets

3     (1)  

In FA 1989, after section 83 insert—

“83XA   

 Structural assets

(1)   

Section 83(2) does not require to be taken into account as receipts or

expenses of a period of account income from, or an increase or a

15

decrease in the value of, structural assets by an insurance company

held in a non-profit fund.

(2)   

In this section “structural assets” means—

(a)   

shares, debts and loans the value of which is required to be

entered in lines 21 to 24 of Form 13 in the periodical return

20

(UK insurance dependants and other insurance dependants),

and

(b)   

assets of such other descriptions as are specified by

regulations made by the Treasury.

(3)   

Regulations under subsection (2) above may be made so as to have

25

effect in relation to periods of account current when they are made

(as well as accounting periods beginning later).

(4)   

Where a structural asset held by an insurance company in a non-

profit fund ceases to be an asset of the company’s long-term

insurance fund, the relevant value difference is to be taken into

30

account under section 83(2)—

(a)   

as a receipt (if it is a positive amount), or

(b)   

as an expense (if it is a negative amount),

   

of the period of account in which it so ceases.

(5)   

“The relevant value difference” is the difference between historic cost

35

and shown value; and in this section—

“historic cost”, in relation to an asset, means the consideration

given by the company for the acquisition of the asset or,

where the asset was acquired by the company on a transfer of

business, the consideration given by the last person who

40

acquired it otherwise than on such a transfer, and

“shown value”, in relation to an asset, means the value of the

asset as shown in Form 13 of the periodical return for the

period of account of the company immediately before the

first period of account in which the asset was a structural

45

asset held by the company in a non-profit fund.

 

 

Finance Bill
Schedule 10 — Insurance companies: miscellaneous

164

 

(6)   

For the purposes of the Taxation of Chargeable Gains Act 1992 an

insurance company is to be treated as acquiring a structural asset for

a consideration equal to historic cost at the beginning of the first

period of account of the company in which the asset is a structural

asset held by the company in a non-profit fund.

5

(7)   

Structural assets held by an insurance company in a non-profit fund

are to be treated as being within paragraph (f) of subsection (4) of

section 440 of the Taxes Act 1988; but no disposal or re-acquisition is

to be deemed to occur by virtue of an asset ceasing to be within any

other paragraph of that subsection and coming within that

10

paragraph on becoming such a structural asset.

(8)   

Structural assets held by an insurance company in a non-profit fund

are to be treated as being “remaining” securities within section

440A(2)(e) of the Taxes Act 1988.

(9)   

Section 432A of the Taxes Act 1988 does not have effect in relation to

15

income arising from, or gains and losses accruing on the disposal of,

structural assets held by an insurance company in a non-profit

fund.”

      (2)  

In ICTA, omit section 444ACA (transfers of business).

      (3)  

In section 432E(2A) of that Act, omit “444ACA(2),” and paragraph (b).

20

Losses on disposal of authorised investment fund assets to connected manager

4          

In TCGA 1992, after section 210B insert—

“210C   

  Losses on disposal of authorised investment fund assets to connected

manager

(1)   

Section 18(3) does not apply in relation to a loss accruing on the

25

disposal by an insurance company of authorised investment fund

assets to the manager of the authorised investment fund.

(2)   

In this section—

“authorised investment fund assets” means assets of the

company’s long-term insurance fund consisting of rights

30

under an authorised unit trust or shares in an open-ended

investment company,

“the manager of the authorised investment fund” means—

(a)   

in the case of an authorised unit trust, the person who

is the manager of the unit trust scheme for the

35

purposes of Chapter 3 of Part 17 of the Financial

Services and Markets Act 2000, and

(b)   

in the case of an open-ended investment company, a

director or other person having responsibility for the

management of its scheme property, and

40

“open-ended investment company” means a company

incorporated in the United Kingdom to which section 236 of

the Financial Services and Markets Act 2000 applies.”

 

 

Finance Bill
Schedule 10 — Insurance companies: miscellaneous

165

 

Priority of section 83(2) of FA 1989 etc

5     (1)  

Section 83 of FA 1989 (receipts to be taken into account) is amended as

follows.

      (2)  

After subsection (2) insert—

“(2ZA)   

Amounts brought into account as mentioned in subsection (2) above

5

are not to be taken into account in any other way; and this subsection

applies in spite of—

(a)   

section 80(5) of the Finance Act 1996 (taxation of loan

relationships),

(b)   

paragraph 1(2) of Schedule 26 to the Finance Act 2002

10

(taxation of profits from derivative contracts), and

(c)   

paragraph 1(3) of Schedule 29 to that Act (gains and losses in

respect of intangible fixed assets).”

      (3)  

In subsection (2A), after paragraph (aa) insert—

“(ab)   

comprises a business transfer-in that is not brought into

15

account in a revenue account prepared for the purposes of

Chapter 9 of the Prudential Sourcebook (Insurers) in respect

of the whole of the company’s long-term business,”.

      (4)  

Omit—

(a)   

in section 502H of ICTA, in subsection (2), paragraph (b) and the

20

word “and” before it and subsections (8) to (10),

(b)   

paragraph 2(2) and (3) to (5) of Schedule 11 to FA 1996,

(c)   

paragraph 19(1) to (3) of Schedule 12 to FA 1997, and

(d)   

paragraph 36(4) and (5) of Schedule 29 to FA 2002.

Tidying up of TCGA 1992

25

6     (1)  

TCGA 1992 is amended as follows.

      (2)  

In section 210B(6)(a) (disposal and acquisition of section 440A securities), for

the words after “are” substitute “assets within section 212(1).”.

      (3)  

Omit—

(a)   

section 212(2A) (disapplication of section 212(1) to assets treated as

30

representing rights under a creditor relationship),

(b)   

section 214 (rights under authorised unit trusts etc: transitional

provisions), and

(c)   

section 214A (further transitional provisions).

Tidying up of Chapter 2 of Part 4 of FA 1996

35

7     (1)  

Chapter 2 of Part 4 of FA 1996 (loan relationships) is amended as follows.

      (2)  

In section 103(3) (loan relationships: interpretation), omit “or” at the end of

paragraph (a) and after paragraph (b) insert “or

(c)   

any basic life assurance and general annuity business,”.

      (3)  

In sub-paragraph (1) of paragraph 1A of Schedule 9 (life assurance policies),

40

for the words after “relating to” substitute “liabilities of an insurance

company within paragraph (a) of the definition of “liabilities” in section

 

 

Finance Bill
Schedule 10 — Insurance companies: miscellaneous

166

 

431(2) of the Taxes Act 1988.”; and the italic heading before that paragraph

accordingly becomes “Insurance company liabilities”.

      (4)  

In Schedule 11, omit paragraph 1(1A) to (1C).

Correction of erroneous repeal

8          

The repeals made by Schedule 3 to ITA 2007 in paragraph 11 of Schedule 6

5

to FA 1990 are deemed never to have had effect; but Schedule 3 to ITA 2007

is deemed to have included the repeal of the words before the paragraphs in

sub-paragraph (1) of that paragraph.

Non-profit companies, non-profit funds and with-profits funds

9     (1)  

In section 431(2) of ICTA (interpretative provisions relating to insurance

10

companies) insert at the appropriate place—

““non-profit company”, in relation to a period of account,

means a company carrying on long-term business where, at

the end of the period—

(a)   

none of the liabilities of that business, or

15

(b)   

none but an insignificant proportion of those

liabilities,

are with-profits liabilities;”,

““non-profit fund” means a fund that is not a with-profits

fund;”, and

20

““with-profits fund” has the meaning given by the Prudential

Sourcebook (Insurers);”.

      (2)  

Omit—

(a)   

in section 432YA(5) of ICTA, the definitions of “non-profit company”

and “non-profit fund”,

25

(b)   

section 82D(5) of FA 1989,

(c)   

in section 83YA of that Act, subsection (8) and, in subsection (11), the

definition of “with-profits fund”, and

(d)   

in section 83A of that Act, in subsections (2)(b) and (3D)(b) “(see

subsection (6))” and subsection (6).

30

Internal linked funds and net value

10    (1)  

In section 431(2) of ICTA (interpretative provisions relating to insurance

companies) insert at the appropriate place—

““internal linked fund”, in relation to an insurance company,

means an account—

35

(a)   

to which linked assets are appropriated by the

company, and

(b)   

which may be divided into units the value of which is

determined by the company by reference to the value

of those assets;”, and

40

““net value”, in relation to any assets, means the excess of the

value of the assets over the value of money debts (within the

meaning of Chapter 2 of Part 4 of the Finance Act 1996)

attributable to an internal linked fund which are not owed in

respect of liabilities;”.

45

 

 

Finance Bill
Schedule 10 — Insurance companies: miscellaneous

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      (2)  

Omit—

(a)   

in section 432ZA(6) of ICTA, the definition of “internal linked fund”,

(b)   

section 432A(9A) of that Act,

(c)   

the definition of “internal linked fund” in section 210B(8) of TCGA

1992, and

5

(d)   

paragraph 3A(6) of Schedule 11 to FA 1996.

Fair value

11    (1)  

In section 431(2) of ICTA (interpretative provisions relating to insurance

companies) insert at the appropriate place—

““fair value”, in relation to assets, means the amount which

10

would be obtained from an independent person purchasing

them or, if the assets are money, its amount;”.

      (2)  

In section 440 of ICTA (transfer of assets etc)—

(a)   

in subsections (1) and (2), for “market” substitute “fair”, and

(b)   

omit subsection (5).

15

      (3)  

Omit—

(a)   

section 444AB(6) of ICTA (as originally enacted),

(b)   

in section 444AC(11) of that Act (as originally enacted), the words

from the beginning to the end of the definition of “fair value”,

(c)   

section 444AD(5) of that Act,

20

(d)   

in section 83(8) of FA 1989, in the definition of “fair value”,

paragraph (a), and

(e)   

section 83YB(5) of that Act.

Generalisation of definitions

12    (1)  

Section 431 of ICTA (interpretative provisions relating to insurance

25

companies) is amended as follows.

      (2)  

For subsection (1) substitute—

“(1)   

This section has effect for the interpretation of the life assurance

provisions of the Corporation Tax Acts.”

      (3)  

In subsection (2), insert at the appropriate place—

30

““the life assurance provisions of the Corporation Tax Acts”

means—

(a)   

the provisions of this Chapter so far as relating to life

assurance business, companies carrying on such

business and friendly societies, and

35

(b)   

any other provisions of the Corporation Tax Acts

making separate provision by reference to whether or

not the business of a company is or includes life

assurance business or any category of business that

includes life assurance business;”.

40

13    (1)  

Section 431A (power to amend) is amended as follows.

      (2)  

In subsection (1), for “insurance company taxation provision” substitute “of

the life assurance provisions of the Corporation Tax Acts”.

 

 

 
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