House of Commons portcullis
House of Commons
Session 2006 - 07
Internet Publications
Other Bills before Parliament

Finance Bill


Finance Bill
Schedule 9 — Insurance companies: transfers etc

153

 

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—

(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

5

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

return of the transferor covering the transfer date.

(2)   

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

10

section.

444ABC  

 Transfer scheme transferring part of business: transferor

(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

15

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

insurance fund which are transferred from the transferor to the

transferee by the insurance business transfer scheme are not,

20

immediately after their transfer—

(a)   

if the transferee is an insurance company, assets of the

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,

25

   

(“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

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

30

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]]]]

where

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

35

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

section.”

      (2)  

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

40

(a)   

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

(b)   

after paragraph (a) insert—

“(aa)   

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

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

154

 

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)   

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

section.”

Transfer schemes: taxing the transferee

6     (1)  

In ICTA, for section 444AC substitute—

15

“444AC  

 Transfer schemes transferring whole of business: reduction in

income of transferee

(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

20

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

(2)   

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

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

25

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

relevant period of account.

(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

30

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

transferred surplus.

(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.

35

(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

40

(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

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

155

 

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

below is met.

(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.

5

(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

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.

10

(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

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.

15

(5)   

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

section.”

      (2)  

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

paragraph (b).

Repeal of section 444AD

20

7     (1)  

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

83(2B) of FA 1989).

      (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

25

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

which—

(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

30

immediately before the transfer, exceeds

(b)   

the amount of any business transfer-in brought into account

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)

35

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

40

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

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

156

 

(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

obtaining of that Case I advantage.

(2)   

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

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

5

together with any relevant associated operations.

(3)   

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

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

10

transferor for the period of account of the transferor covering the

transfer date.

(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

15

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

the transfer date.

(5)   

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

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

20

(a)   

any other insurance business transfer scheme,

(b)   

any contract of reinsurance,

(c)   

any reconstruction or amalgamation involving the transferor,

a dependant of the transferor which is an insurance

undertaking or the transferee, or

25

(d)   

any surplus-increasing transfer of assets,

   

which is effected in connection with the relevant transfer scheme.

(6)   

In subsection (5) above—

“dependant” and “insurance undertaking” have the same

meaning as in the Insurance Prudential Sourcebook, and

30

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

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

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

35

transferee.

(7)   

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

section.

444AEB  

 Case I advantage: transferor

(1)   

A Case I advantage is obtained by the transferor if—

40

(a)   

Case I profits of its life assurance business for a period of

account to which this section applies are less than they would

be but for the transfer scheme arrangements or any part of the

transfer scheme arrangements, or

(b)   

Case I losses of its life assurance business for such a period of

45

account are greater than they would be but for the transfer

scheme arrangements or any part of the transfer scheme

arrangements.

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

157

 

(2)   

If a Case I advantage is obtained by the transferor, the amount of the

Case I advantage is the aggregate of—

(a)   

the amounts (if any) by which Case I profits for each period

of account to which this section applies are less than they

would be but for the transfer scheme arrangements or part,

5

and

(b)   

the amounts (if any) by which Case I losses for each such

period of account are greater than they would be but for the

transfer scheme arrangements or part.

(3)   

This section applies to a period of account if it is—

10

(a)   

the period of account of the transferor covering the transfer

date,

(b)   

any earlier period of account of the transferor, or

(c)   

where any relevant associated operations are effected in any

later period of account, that period of account.

15

(4)   

In this section and section 444AEC “Case I profits” and “Case I

losses” means profits and losses computed in accordance with the

provisions of Case I of Schedule D.

(5)   

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

444AEA for the meaning of “relevant associated operations”, in this

20

section.

444AEC  

 Case I advantage: transferee

(1)   

A Case I advantage is obtained by the transferee if—

(a)   

Case I profits of its life assurance business for a period of

account to which this section applies are less than they would

25

be but for the transfer scheme arrangements or any part of the

transfer scheme arrangements, or

(b)   

Case I losses of its life assurance business for such a period of

account are greater than they would be but for the transfer

scheme arrangements or any part of the transfer scheme

30

arrangements.

(2)   

If a Case I advantage is obtained by the transferee, the amount of the

Case I advantage is—

(a)   

the amount by which Case I profits for each period of account

to which this section applies are less than they would be but

35

for the transfer scheme arrangements or part, or

(b)   

the amount by which Case I losses for each such period of

account are greater than they would be but for the transfer

scheme arrangements or part.

(3)   

This section applies to a period of account if it is—

40

(a)   

the first period of account of the transferee ending after the

transfer date or after the effecting of the first of any relevant

associated operations (if that occurs before the transfer date),

(b)   

the second period of account of the transferee ending after

the transfer date or after the effecting of the last of any

45

relevant associated operations (if that occurs after the transfer

date), or

(c)   

any intervening period of account.

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

158

 

(4)   

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

444AEA for the meaning of “relevant associated operations” and

section 444AEB for the meaning of “Case I profits” and “Case I

losses”, in this section.

444AED  

 Clearance: no avoidance or group advantage

5

(1)   

Section 444AEA does not apply in relation to the transferor or the

transferee if, on an application under this section, the Commissioners

for Her Majesty’s Revenue and Customs (“the HMRC

Commissioners”) have given a notice under subsection (2) below.

(2)   

A notice under this subsection is a notice stating that the HMRC

10

Commissioners are satisfied—

(a)   

that the obtaining of a Case I advantage by the applicant is

not the sole or main purpose of the whole or any part of the

transfer scheme arrangements, or

(b)   

that the transferor and the transferee are members of the

15

same group of companies and that there is no advantage to

the group arising from any Case I advantage obtained by the

transferor or by the transferee.

(3)   

For the purposes of this section there is no advantage to a group

arising from any Case I advantage obtained by the transferor or by

20

the transferee if—

(a)   

as a result of transfer scheme arrangements, there is an

increase in the liability to corporation tax of one or more

companies which are members of the group of companies,

and

25

(b)   

the amount (or aggregate amount) of that increase is not less

than the reduction in the liability to corporation tax of the

transferor or the transferee (or both) arising from the

obtaining of the Case I advantage.

(4)   

An application under this section must be in writing and contain

30

particulars of the transfer scheme arrangements.

(5)   

The HMRC Commissioners may by notice require the applicant to

provide further particulars in order to enable them to determine the

application.

(6)   

A requirement may be imposed under subsection (5) above within 30

35

days of the receipt of the application or of any further particulars

required under that subsection.

(7)   

If a notice under subsection (5) above is not complied with within 30

days or such longer period as the HMRC Commissioners may allow,

they need not proceed further on the application.

40

(8)   

The HMRC Commissioners must give notice of their decision on an

application under this section to the applicant within 30 days of

receiving the application or, if they give a notice under subsection (5)

above, within 30 days of that notice being complied with.

(9)   

If the HMRC Commissioners—

45

(a)   

give notice to the applicant under subsection (8) above that

they are not satisfied as mentioned in subsection (2) above, or

 

 

Finance Bill
Schedule 9 — Insurance companies: transfers etc

159

 

(b)   

do not comply with subsection (8) above,

   

the applicant may require them to transmit the application to the

Special Commissioners.

(10)   

A requirement under subsection (9) above must be imposed within

30 days of the giving of the notice or the failure to comply and must

5

be accompanied by any notice given under subsection (5) above and

further particulars provided pursuant to any such notice.

(11)   

Any notice given by the Special Commissioners has effect for the

purposes of subsection (1) above as if it were given by the HMRC

Commissioners.

10

(12)   

If any particulars provided under this section do not fully and

accurately disclose all facts and considerations material for the

decision of the HMRC Commissioners or the Special

Commissioners, any resulting notice that they are satisfied as

mentioned in subsection (2) above is void.

15

(13)   

For the purposes of this section two companies are members of the

same group of companies if they are for the purposes of Chapter 4 of

Part 10.”

      (2)  

In section 432E(2A) of ICTA (as amended by paragraph 4(2)), after

“444ABC,” insert “444AEA,” and after paragraph (aa) insert—

20

“(ab)   

section 444AEA of this Act;”.

Repeal of FA s.82C

9          

In FA 1989, omit section 82C (relevant financial reinsurance contracts).

Transfers: receipts to be taken into account

10    (1)  

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

25

follows.

      (2)  

In the first sentence of subsection (2B), for the words from “but the transfer”

to “the time of the transfer” substitute “the fair value of the assets at the time

of the transfer, reduced by any amount brought into account in respect of

them (for the period of account in which the transfer takes place or any

30

earlier period of account) as part of total expenditure or as a business

transfer-out,”.

      (3)  

In that sentence (as amended by sub-paragraph (2))—

(a)   

omit “or as a business transfer-out”, and

(b)   

for the words after “value of the assets of that fund” substitute

35

“except to the extent that any of the exclusions in subsections (2C) to

(2E) below apply.”

      (4)  

Omit the second sentence of subsection (2B).

      (5)  

For subsection (2E) substitute—

“(2E)   

Assets transferred by an insurance business transfer scheme are

40

excluded from subsection (2B) above.”

 

 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2007
Revised 8 June 2007