|
| |
|
(14) | Regulations under section 182(1)(a) of FA 1993 or section 229(1)(a) of FA |
| |
1994 (assessment and collection of tax charged in case of Lloyd’s |
| |
underwriters) may, in particular, include provision applying paragraph 2 |
| |
with modifications in the case of members of a Lloyd’s syndicate. |
| |
(15) | Regulations under paragraph 1 or this paragraph may— |
| 5 |
(a) | make different provision for different purposes, and |
| |
(b) | make supplementary, incidental, consequential and transitional |
| |
| |
Repeal of section 107 of FA 2000 |
| |
4 | In FA 2000, omit section 107 (general insurance reserves). |
| 10 |
| |
5 (1) | Paragraphs 1 to 3 have effect in relation to periods of account ending on or |
| |
after the day on which this Act is passed. |
| |
(2) | The repeal of section 107 of FA 2000 made by paragraph 4 has effect as |
| |
| 15 |
| |
(a) | subsections (1) to (3) of that section (technical provisions made by a |
| |
general insurer proving to be excessive or insufficient), |
| |
(b) | subsections (5) to (8) and (10) of that section so far as relating to those |
| |
| 20 |
(c) | subsections (9) and (12)(a) of that section (which relate to those |
| |
| |
| has effect in relation to any amount that would otherwise have been treated |
| |
as a receipt or an expense of a trade in computing for tax purposes the profits |
| |
of the trade for any period of account ending on or after the day on which |
| 25 |
| |
| |
(a) | subsection (4) of that section (election for any part of technical |
| |
provisions not to be taken into account in a period of account), |
| |
(b) | subsections (5) to (8) and (10) of that section so far as relating to that |
| 30 |
| |
(c) | subsection (12)(b) of that section (which relates to that subsection), |
| |
| has effect so that no election may be made under that subsection in respect |
| |
of technical provisions made by a general insurer for any period of account |
| |
which begins on or after that day. |
| 35 |
(5) | There is a restriction in relation to any election made by a general insurer |
| |
under that subsection in respect of technical provisions made by the general |
| |
insurer for the final election period. |
| |
(6) | The restriction is that the amount of the part of those provisions which the |
| |
general insurer elects not to be taken into account in computing for tax |
| 40 |
purposes the profits of the general insurer’s trade for that period must not |
| |
exceed 10% of the total amount of those provisions. |
| |
(7) | In sub-paragraph (5) “the final election period”, in relation to any general |
| |
insurer, means the general insurer’s first period of account ending on or |
| |
after the day on which this Act is passed. |
| 45 |
|
| |
|
| |
|
| |
| |
Friendly societies: transfers to insurance companies etc |
| |
Exempt life or endowment business |
| |
1 (1) | Section 460 of ICTA (exemption from tax in respect of life or endowment |
| |
business) is amended as follows. |
| 5 |
(2) | In subsection (10A), after “the transfer” insert “, other than any to which |
| |
subsection (11) or (12) below applied immediately before the transfer had |
| |
| |
(3) | In subsection (11), for “thereafter continue to be tax exempt life or |
| |
endowment business for the purposes of this Chapter.” substitute “continue |
| 10 |
to be exempt from corporation tax (whether on income or chargeable gains) |
| |
on profits arising from it.” |
| |
(4) | For subsection (12) substitute— |
| |
“(12) | Where at any time an insurance company acquires by way of transfer |
| |
of engagements from a friendly society any life or endowment |
| 15 |
business consisting of business which— |
| |
(a) | relates to contracts made before that time; and |
| |
(b) | immediately before that time was tax exempt life or |
| |
| |
| that business shall continue to be exempt from corporation tax |
| 20 |
(whether on income or chargeable gains) on profits arising from it. |
| |
(13) | But if any contracts constituting or forming part of the business of a |
| |
company covered by subsection (11) or (12) above are varied during |
| |
an accounting period of the company so as to increase the premiums |
| |
payable under them, the business relating to those contracts is not |
| 25 |
exempt from corporation tax for that or any subsequent accounting |
| |
| |
(14) | For the purposes of the Corporation Tax Acts any part of a |
| |
company’s business which is exempt from corporation tax by virtue |
| |
of subsection (11) or (12) above shall be treated as a separate business |
| 30 |
from any other business carried on by the company.” |
| |
| |
“(15) | The Treasury may by regulations provide that, where any part of the |
| |
business of a company is exempt from corporation tax by virtue of |
| |
subsection (11) or (12) above, the Corporation Tax Acts have effect |
| 35 |
subject to such modifications (or exceptions) as the Treasury |
| |
| |
(16) | Regulations under subsection (15) above— |
| |
(a) | may make different provision for different cases, |
| |
(b) | may include any incidental, supplementary, consequential or |
| 40 |
transitional provisions which the Treasury consider |
| |
| |
(c) | may include retrospective provision.” |
| |
|
| |
|
| |
|
2 (1) | Section 464 of ICTA (maximum benefits payable to members) is amended as |
| |
| |
(2) | For the first sentence of subsection (1) substitute— |
| |
“(1) | Subject to subsections (2) and (3) below, a person is not entitled to |
| |
have at any time outstanding contracts with any one or more friendly |
| 5 |
societies, registered branches or insurance companies which (taking |
| |
them all together) are for the assurance of— |
| |
(a) | more than £750 by way of gross sum under business which is |
| |
afforded exemption from corporation tax by section 460, or |
| |
(b) | more than £156 by way of annuity under such business.” |
| 10 |
(3) | In subsection (3), for the words preceding the paragraphs substitute “With |
| |
respect to contracts for the assurance of gross sums under business which is |
| |
afforded exemption from corporation tax by section 460, a person is not |
| |
entitled to have outstanding at any time with any one or more friendly |
| |
societies, registered branches or insurance companies—”. |
| 15 |
(4) | In subsection (4A), for “tax exempt life or endowment business” substitute |
| |
“business which is afforded exemption from corporation tax by section 460 |
| |
| |
(5) | In subsection (6), for “member has outstanding with one or more society or |
| |
branch” substitute “person has outstanding with one or more societies, |
| 20 |
| |
| |
(a) | for “or registered branch” substitute “, registered branch or |
| |
| |
(b) | for “member” (in both places) substitute “person”, and |
| 25 |
(c) | for “or registered branches (taking together all such societies or |
| |
branches throughout the United Kingdom)” substitute “, registered |
| |
branches or insurance companies (taken together)”. |
| |
3 | In section 466(2) of ICTA, in the definition of “tax exempt life or endowment |
| |
business”, for “(11)” substitute “(10A)”. |
| 30 |
| |
4 (1) | Section 461 of ICTA (exemption of registered friendly societies from tax in |
| |
respect of business which is not life or endowment business) is amended as |
| |
| |
(2) | After subsection (4) insert— |
| 35 |
| |
(a) | at any time an insurance company acquires by way of |
| |
transfer of engagements from a registered friendly society |
| |
any business other than life or endowment business, and |
| |
(b) | immediately before that time the society was exempt from |
| 40 |
corporation tax on profits arising from that business, |
| |
| the insurance company shall be exempt from corporation tax on its |
| |
profits arising from any part of that business which relates to |
| |
contracts made before that time. |
| |
|
| |
|
| |
|
(4B) | But if during an accounting period of the insurance company there is |
| |
an increase in the scale of benefits which it undertakes to provide in |
| |
the course of carrying on any such part of that business, the company |
| |
shall not be exempt from corporation tax by virtue of subsection (4A) |
| |
above for that or any subsequent accounting period.” |
| 5 |
(3) | In subsection (5), after “(4)” insert “or (4A)”. |
| |
| |
“(12) | The Treasury may by regulations provide that, where any part of the |
| |
business of a company is exempt from corporation tax by virtue of |
| |
subsection (4) or (4A) above, the Corporation Tax Acts have effect |
| 10 |
subject to such modifications (or exceptions) as the Treasury |
| |
| |
(13) | Regulations under subsection (12) above— |
| |
(a) | may make different provision for different cases, |
| |
(b) | may include any incidental, supplementary, consequential or |
| 15 |
transitional provisions which the Treasury consider |
| |
| |
(c) | may include retrospective provision.” |
| |
5 (1) | Section 461B of ICTA (exemption of incorporated friendly societies from tax |
| |
in respect of business which is not life or endowment business) is amended |
| 20 |
| |
(2) | For subsection (6) substitute— |
| |
“(6) | But if during an accounting period of the company there is an |
| |
increase in the scale of benefits which it undertakes to provide in the |
| |
course of carrying on any such part of its business, the company shall |
| 25 |
not be exempt from corporation tax by virtue of subsection (5) above |
| |
for that or any subsequent accounting period. |
| |
| |
(a) | at any time an insurance company acquires by way of |
| |
transfer of engagements from a qualifying society any |
| 30 |
business other than life or endowment business, and |
| |
(b) | immediately before that time the society was exempt from |
| |
corporation tax on profits arising from that business, |
| |
| the insurance company shall be exempt from corporation tax on its |
| |
profits arising from any part of that business which relates to |
| 35 |
contracts made before that time. |
| |
(6B) | But if during an accounting period of the insurance company there is |
| |
an increase in the scale of benefits which it undertakes to provide in |
| |
the course of carrying on any such part of that business, the company |
| |
shall not be exempt from corporation tax by virtue of subsection (6A) |
| 40 |
above for that or any subsequent accounting period.” |
| |
(3) | In subsection (7), after “(5)” insert “or (6A)”. |
| |
| |
“(8) | The Treasury may by regulations provide that, where any part of the |
| |
business of a company is exempt from corporation tax by virtue of |
| 45 |
subsection (5) or (6A) above, the Corporation Tax Acts have effect |
| |
|
| |
|
| |
|
subject to such modifications (or exceptions) as the Treasury |
| |
| |
(9) | Regulations under subsection (8) above— |
| |
(a) | may make different provision for different cases, |
| |
(b) | may include any incidental, supplementary, consequential or |
| 5 |
transitional provisions which the Treasury consider |
| |
| |
(c) | may include retrospective provision.” |
| |
| |
6 (1) | The amendment made by sub-paragraph (2) of paragraph 1, so far as |
| 10 |
relating to section 460(11) of ICTA, and the amendments made by sub- |
| |
paragraph (3) of that paragraph and paragraph 3 are deemed always to have |
| |
| |
(2) | The amendments made by paragraph 2 have effect in relation to contracts |
| |
made after the passing of this Act. |
| 15 |
(3) | The amendment made by sub-paragraph (2) of paragraph 1, so far as |
| |
relating to section 460(12) of ICTA, and the amendments made by sub- |
| |
paragraph (4) of that paragraph and paragraphs 4(2) and (3) and 5(2) and (3) |
| |
have effect in relation to transfers of engagements and conversions taking |
| |
place on or after the day on which this Act is passed. |
| 20 |
| |
| |
Sale and repurchase of securities |
| |
| |
1 (1) | The purpose of this Schedule is to secure that in the case of an |
| |
| 25 |
(a) | which involves the sale of securities and the subsequent purchase of |
| |
| |
(b) | which equates, in substance, to a transaction for the lending of |
| |
money at interest from or to a company (with the securities which |
| |
were sold as collateral for the loan), |
| 30 |
| the charge to corporation tax in that case reflects the fact that the |
| |
arrangement equates, in substance, to such a transaction. |
| |
(2) | But this is not to be read as preventing the rules in this Schedule about |
| |
corporation tax in respect of chargeable gains from having no effect in |
| |
relation to debtor quasi-repos and creditor quasi-repos. |
| 35 |
| |
2 (1) | For the purposes of this Schedule a company (“the borrower”) has a debtor |
| |
repo if conditions A to E are met. |
| |
(2) | Condition A is that under an arrangement the borrower receives from |
| |
another person (“the lender”) any money or other asset (“the advance”). |
| 40 |
|
| |
|
| |
|
(3) | Condition B is that, in accordance with generally accepted accounting |
| |
practice, the accounts of the borrower for the period in which the advance is |
| |
received record a financial liability in respect of the advance. |
| |
(4) | Condition C is that under the arrangement the borrower sells any securities |
| |
at any time to the lender. |
| 5 |
(5) | Condition D is that the arrangement makes provision conferring a right or |
| |
imposing an obligation on the borrower to buy those or similar securities at |
| |
| |
(6) | Condition E is that, in accordance with generally accepted accounting |
| |
practice, the subsequent buying of those or similar securities would |
| 10 |
extinguish the financial liability in respect of the advance recorded in the |
| |
accounts of the borrower. |
| |
(7) | For the purposes of conditions A to E references to the borrower include a |
| |
partnership of which the borrower is a member. |
| |
Meaning of debtor quasi-repo |
| 15 |
3 (1) | For the purposes of this Schedule a company (“the borrower”) has a debtor |
| |
quasi-repo in any case if— |
| |
(a) | the borrower does not have a debtor repo in that case, and |
| |
(b) | conditions A to E are met in that case. |
| |
(2) | Condition A is that under an arrangement the borrower receives any money |
| 20 |
or other asset (“the advance”). |
| |
(3) | Condition B is that, in accordance with generally accepted accounting |
| |
practice, the accounts of the borrower for the period in which the advance is |
| |
received record a financial liability in respect of the advance. |
| |
(4) | Condition C is that under that or any other arrangement the borrower or any |
| 25 |
other person sells any securities at any time. |
| |
(5) | Condition D is that the arrangement or other arrangement— |
| |
(a) | makes provision conferring a right or imposing an obligation on the |
| |
borrower to buy the securities or any other securities at any |
| |
| 30 |
(b) | makes provision conferring such a right or imposing such an |
| |
obligation on any other person and makes other relevant provision. |
| |
(6) | For this purpose any arrangement makes “other relevant provision” if it |
| |
| |
(a) | for the receipt of any money or other asset from the borrower under |
| 35 |
that arrangement for the purpose of enabling the other person to |
| |
make that subsequent purchase, or |
| |
(b) | for the discharge of any liability to the borrower under that |
| |
arrangement for that purpose (whether by way of set off or |
| |
| 40 |
(7) | Condition E is that, in accordance with generally accepted accounting |
| |
| |
(a) | the subsequent buying of the securities or the other securities by the |
| |
| |
|
| |
|
| |
|
(b) | the receipt of the asset from the borrower, or the discharge of the |
| |
liability to the borrower, under the arrangement or other |
| |
| |
| would extinguish the financial liability in respect of the advance recorded in |
| |
the accounts of the borrower. |
| 5 |
(8) | For the purposes of conditions A to E references to the borrower include a |
| |
partnership of which the borrower is a member. |
| |
Ignoring effect on borrower of sale of securities: debtor repos, debtor quasi-repos and other |
| |
| |
4 (1) | This paragraph applies if a company (“the borrower”)— |
| 10 |
(a) | has a debtor repo or a debtor quasi-repo, or |
| |
(b) | has a liability which is discharged under a relevant arrangement. |
| |
(2) | A relevant arrangement is one in relation to which conditions C and D in |
| |
paragraph 3 are met and the main purpose, or one of the main purposes, of |
| |
which is the obtaining of a tax advantage. |
| 15 |
(3) | For the purposes of the charge to corporation tax in respect of income of the |
| |
borrower arising while the arrangement is in force, the Corporation Tax Acts |
| |
| |
(a) | the borrower held the securities that are initially sold for any period |
| |
for which the arrangement is in force, and |
| 20 |
(b) | the borrower did not receive in that period amounts representative |
| |
of income payable in respect of those securities. |
| |
| |
(a) | no amount is to be charged to corporation tax as a result of sub- |
| |
paragraph (3)(a) unless it is, in accordance with generally accepted |
| 25 |
accounting practice, recognised in determining the borrower’s profit |
| |
or loss for that or any other period or taken into account in |
| |
calculating the amounts which are so recognised, and |
| |
(b) | there is the following exception to sub-paragraph (3) if the securities |
| |
that are initially sold are overseas securities. |
| 30 |
(5) | In the case of any overseas dividend payable in respect of those securities, |
| |
the entitlement of the borrower to double taxation relief in respect of that |
| |
dividend is determined as if— |
| |
(a) | sub-paragraph (3) were omitted, |
| |
(b) | the borrower received a payment of an amount which is |
| 35 |
representative of that dividend, |
| |
(c) | the payment were made under a requirement of the arrangement, |
| |
| |
(d) | the payment were made on the date on which that dividend is |
| |
| 40 |
(6) | For the purposes of this paragraph “double taxation relief” means any relief |
| |
given under or as a result of Part 18 of ICTA. |
| |
|
| |
|