|
| |
|
(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 |
| |
| |
(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 |
| |
| 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 |
| |
(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. |
| |
|
| |
|
| |
|
(3) | That amount is—![equation: over[times[char[R],char[A]],times[char[N],char[Y]]]](missing.gif) |
| |
| |
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 |
| |
| |
(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 |
| |
| |
(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 |
| |
(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 |
| |
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 |
| |
|
| |
|
| |
|
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 |
| |
| |
(3) | In FA 1996, omit paragraph 2(2A) of Schedule 11. |
| 10 |
| |
3 (1) | In FA 1989, after section 83 insert— |
| |
| |
(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), |
| |
| |
(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. |
| |
|
| |
|
| |
|
(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 |
| |
| |
(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 |
| |
| |
(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. |
| |
| |
“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 |
| |
| |
“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.” |
| |
|
| |
|
| |
|
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 |
| |
| |
(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 |
| |
| |
(a) | section 80(5) of the Finance Act 1996 (taxation of loan |
| |
| |
(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,”. |
| |
| |
(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. |
| |
| 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).”. |
| |
| |
(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 |
| |
| |
(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 |
| |
|
| |
|
| |
|
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 |
| |
| |
(a) | none of the liabilities of that business, or |
| 15 |
(b) | none but an insignificant proportion of those |
| |
| |
are with-profits liabilities;”, |
| |
““non-profit fund” means a fund that is not a with-profits |
| |
| 20 |
““with-profits fund” has the meaning given by the Prudential |
| |
| |
| |
(a) | in section 432YA(5) of ICTA, the definitions of “non-profit company” |
| |
| 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, |
| |
| 35 |
(a) | to which linked assets are appropriated by the |
| |
| |
(b) | which may be divided into units the value of which is |
| |
determined by the company by reference to the value |
| |
| 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 |
|
| |
|
| |
|
| |
(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 |
| |
| 5 |
(d) | paragraph 3A(6) of Schedule 11 to FA 1996. |
| |
| |
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 |
| |
| 15 |
| |
(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”, |
| |
| |
(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” |
| |
| |
(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”. |
| |
|
| |
|