Finance Bill

House of Commons

Session 2006 - 07
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Finance Bill

Finance Bill
Schedule 9 — Insurance companies: transfers etc
149

Transfer schemes: expenses, losses etc
2     (1)
Section 444A of ICTA (transfers of business: expenses, losses and section
432F(2) excesses) is amended as follows.
      (2)
In subsection (1), omit “Subject to subsection (7) below,”.
      (3)
Omit—
5
(a)
subsection (7) (section not to apply if transfer is not for bona fide
commercial reasons or forms part of avoidance scheme), and
(b)
subsection (8) (clearance procedure as to non-application of
subsection (7)).
Transfer schemes: deemed periodical returns
10
3     (1)
In ICTA, for section 444AA substitute—
“444AA
Transfers of business: deemed periodical return
(1)
This section applies where the whole, or substantially the whole, of
the long-term business of a person (“the transferor”) is transferred
from that person—
15
(a)
by one insurance business transfer scheme, or
(b)
by two or more insurance business transfer schemes which
are associated.
(2)
For the purposes of subsection (1) above two or more insurance
business transfer schemes are associated if they form part of an
20
arrangement for the transfer of the whole, or substantially the whole,
of the transferor’s long-term business.
(3)
Where (apart from this subsection) there would not be a periodical
return of the transferor covering a period ending immediately before
a relevant transfer date, there is to be deemed for the purposes of
25
corporation tax to be a periodical return of the transferor covering
the period—
(a)
beginning immediately after the last period ending before the
relevant transfer date which is covered by a periodical return
of the transferor, and
30
(b)
ending immediately before the relevant transfer date,

containing such entries as would be included in an actual periodical
return of the transferor covering that period (and so making that
period a period of account of the transferor).
(4)
There is to be deemed for the purposes of corporation tax to be a
35
periodical return of the transferor—
(a)
covering a relevant transfer date, and
(b)
containing such entries as would be included in an actual
periodical return covering the relevant transfer date,

(and so making the relevant transfer date a period of account of the
40
transferor).
(5)
Any actual periodical return covering a period which includes a
relevant transfer date is to be ignored for the purposes of corporation
tax.

Finance Bill
Schedule 9 — Insurance companies: transfers etc
150

(6)
Where the transferor continues to carry on long-term business after
a relevant transfer date, there is to be deemed for the purposes of
corporation tax to be a periodical return of the transferor covering
the immediate post-RTD period containing such entries as would be
included in an actual periodical return covering that period (and so
5
making that period a period of account of the transferor).
(7)
In this section “relevant transfer date” means—
(a)
in relation to a case within paragraph (a) of subsection (1)
above, the date that is the transfer date in relation to the
insurance business transfer scheme, and
10
(b)
in relation to a case within paragraph (b) of that subsection—
(i)
the earliest date that is the transfer date in relation to
any of the insurance business transfer schemes, other
than one that is a preliminary non-EEA transfer
scheme, and
15
(ii)
(where there are two or more insurance business
transfer schemes that are not preliminary non-EEA
transfer schemes) the latest date that is the transfer
date in relation to any of them.
(8)
In subsection (6) above “the immediate post-RTD period” means the
20
period beginning immediately after the relevant transfer date
mentioned in that subsection and (subject to subsection (9) below)
ending with—
(a)
the end of the period covered by the periodical return
covering a period which includes a relevant transfer date (if
25
there is one), or
(b)
(if there is not) the period covered by the accounts of the
company prepared in accordance with generally accepted
accounting practice which includes the relevant transfer date.
(9)
If the case is within subsection (1)(b) above and two or more of the
30
insurance business transfer schemes are not preliminary non-EEA
transfer schemes, the period ends with the latest date that is the
transfer date in relation to any of them if that is before the end of the
period mentioned in paragraph (a) or (b) of subsection (8) above.
(10)
In this section and sections 444AB to 444AEC “the transfer date”, in
35
relation to an insurance business transfer scheme, means the date on
which it takes effect.
(11)
For the purposes of this section an insurance business transfer
scheme is a preliminary non-EEA transfer scheme if—
(a)
it is an insurance business transfer scheme by virtue of
40
paragraph (b) of the definition of “insurance business
transfer scheme” in section 431(2), and
(b)
the transfer date in relation to it is earlier than the transfer
date in relation to an associated insurance business transfer
scheme which is an insurance business transfer scheme by
45
virtue of paragraph (a) of that definition.”
      (2)
In section 12 of ICTA (accounting periods), for subsection (7C) substitute—
“(7C)
Where section 444AA applies, an accounting period of the transferor
(within the meaning of that section) shall end for the purposes of

Finance Bill
Schedule 9 — Insurance companies: transfers etc
151

corporation tax with the end of any period covered by a periodical
return deemed by that section.”
      (3)
In—
(a)
section 432YA(2A) of ICTA, and
(b)
section 82D(2A) of FA 1989,
5

for “444AA(3)” substitute “444AA(4)”.
      (4)
In section 213(10) of TCGA 1992, for “before the transfer” substitute “before
the relevant transfer date (within the meaning of that section)”.
Transfer schemes: taxing the transferor
4     (1)
In ICTA, for sections 444AB and 444ABA substitute—
10
“444AB
Transfer schemes transferring whole of business: transferor
(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 either or both of conditions A and B are met.
15
(2)
Condition A is met if any of the assets of the transferor’s long-term
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
20
transferee’s long-term insurance fund, or
(b)
if the transferee is not an insurance company, assets of a with-
profits fund of the transferee,

(“relevant non-transferred assets”).
(3)
Condition B is met if, immediately after the transfer date, the
25
transferor—
(a)
does not carry on long-term business, but
(b)
holds any assets which, immediately before the transfer date,
were assets of its long-term insurance fund (“retained
assets”).
30
(4)
If there are relevant non-transferred assets or retained assets (or
both) the relevant amount in relation to them (see subsection (5)
below) is to be taken into account under 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 relevant period of account
35
(see subsection (6) below).
(5)
Section 444ABA makes provision for the calculation of the relevant
amount in relation to relevant non-transferred assets; and section
444ABB makes provision for its calculation in relation to retained
assets.
40
(6)
In this section and sections 444ABA to 444AC “the relevant period of
account” means the period of account of the transferor ending (or
treated by section 444AA as ending) immediately before the transfer
date.

Finance Bill
Schedule 9 — Insurance companies: transfers etc
152

(7)
See section 444AA for the meaning of “the transfer date” in this
section.
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—
5
where—
FVA is the fair value of the assets on the transfer date, and
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
10
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
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.
15
(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
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
20
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
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
25
is

where—
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,
30
immediately before the transfer date, the assets are held by
the transferor, increased or reduced as mentioned in
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.
35
(6)
The increase or reduction referred to in the definition of A in
subsection (5) above is any increase or decrease deemed to be
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
40
444AB for the meaning of “the relevant period of account”, in this
section.