|
| |
|
(a) | by virtue of paragraph 2 the relevant company is required to bring |
| |
into account for an accounting period a non-trading credit |
| |
representing a profit from a related transaction, and |
| |
(b) | the investment life insurance contract is a BLAGAB contract, or a |
| |
contract which is subject to a relevant comparable EEA tax charge. |
| 5 |
(2) | The non-trading credit (“NTC”) is to be treated as increased by the relevant |
| |
amount and the relevant amount is to be set off against corporation tax |
| |
assessable on the company for the accounting period. |
| |
(3) | The relevant amount is—![equation: cross[over[times[char[A],char[R]],plus[num[100.0000000000000000,"100"],minus[times[
char[A],char[R]]]]],times[char[N],char[T],char[C]]]](missing.gif) |
| |
| where AR is the appropriate rate for the accounting period, that is— |
| 10 |
(a) | if a single rate of tax under section 88(1) of FA 1989 (lower |
| |
corporation tax rate on certain insurance company profits) is |
| |
applicable in relation to the accounting period, that rate, and |
| |
(b) | if more than one such rate of tax is applicable in relation to the |
| |
accounting period, the average of those rates over the accounting |
| 15 |
| |
(4) | In sub-paragraph (1) “BLAGAB contract” means a contract forming part of |
| |
basic life assurance and general annuity business of an insurance company |
| |
but not part of business which is exempt from corporation tax under section |
| |
460 of ICTA (friendly society business and former friendly society business). |
| 20 |
(5) | For the purposes of sub-paragraph (1) the contract is subject to a relevant |
| |
comparable EEA tax charge if the contract forms part of the business of a |
| |
company (other than the relevant company) to which a relevant comparable |
| |
EEA tax charge has applied. |
| |
(6) | For the purposes of sub-paragraph (5) a relevant comparable EEA tax charge |
| 25 |
has applied to a company if— |
| |
(a) | a charge to tax has applied to the company under the laws of a |
| |
territory outside the United Kingdom that is within the European |
| |
| |
(b) | the charge has applied to the company— |
| 30 |
(i) | as a body deriving its status as a company from those laws, |
| |
(ii) | as a company with its place of management there, or |
| |
(iii) | as a company falling under those laws to be regarded for any |
| |
other reason as resident or domiciled there, |
| |
(c) | the charge applies at a rate of at least 20% in relation to the amounts |
| 35 |
subject to tax in the company’s hands, other than amounts arising or |
| |
accruing in respect of investments of a description for which a |
| |
special relief or exemption is generally available, and |
| |
(d) | the charge is made otherwise than by reference to the company’s |
| |
| 40 |
4 (1) | Where the relevant company brings into account credits and debits in |
| |
respect of the investment life insurance contract on the basis of fair value |
| |
accounting, the relevant amount under paragraph 3 is determined as if for |
| |
“NTC” in the formula in sub-paragraph (3) of that paragraph there were |
| |
| 45 |
|
| |
|
| |
|
(2) | For this purpose “PC” is the profit from the contract, that is any amount by |
| |
| |
(a) | the amount payable as a result of the related transaction, exceeds |
| |
(b) | the fair value of the contract when the contract was made or, if the |
| |
contract was made before the beginning of the first accounting |
| 5 |
period of the company beginning on or after 1st April 2008, at the |
| |
beginning of that period. |
| |
(3) | If the related transaction is an assignment (or, in Scotland, assignation) or |
| |
surrender of only part of the rights conferred by the contract, sub-paragraph |
| |
(2) has effect as if paragraph (b) of that sub-paragraph referred to the |
| 10 |
relevant fraction of the fair value of the contract when the contract was made |
| |
or, if the contract was made before the beginning of the first accounting |
| |
period of the company beginning on or after 1st April 2008, at the beginning |
| |
| |
(4) | For this purpose the relevant fraction is—![equation: over[char[C],times[char[F],char[V],char[C]]]](missing.gif) |
| 15 |
| |
C is the amount payable as a result of the related transaction, and |
| |
FVC is the fair value of the contract immediately before the related |
| |
| |
| 20 |
5 | This Schedule has effect for accounting periods beginning on or after 1 April |
| |
| |
6 (1) | Where the relevant company was a party to an investment life insurance |
| |
contract immediately before the beginning of the first accounting period of |
| |
the company beginning on or after that date, the company is to be treated for |
| 25 |
the purposes of Chapter 2 of Part 13 of ICTA (life policies etc) as having |
| |
surrendered all the rights under the contract immediately before that date |
| |
for an amount equal to the carrying value of the contract at that time as |
| |
recognised for accounting purposes. |
| |
(2) | Any gain arising under Chapter 2 of Part 13 of ICTA by reason of that |
| 30 |
deemed surrender (“the Chapter 2 gain”)— |
| |
(a) | is not income of the company for the accounting period in which it |
| |
| |
(b) | is instead to be brought into account as a non-trading credit for the |
| |
accounting period in which there is a related transaction. |
| 35 |
(3) | If, immediately after the related transaction, the company is still a party to |
| |
the investment life insurance contract, only the relevant fraction of the |
| |
Chapter 2 gain is brought into account as mentioned in sub-paragraph (2)(b). |
| |
(4) | “The relevant fraction” is—![equation: over[char[P],times[char[S],char[A],char[R]]]](missing.gif) |
| |
| 40 |
P is the amount payable as a result of the related transaction, and |
| |
|
| |
|
| |
|
SAR is the amount that would have been payable on a surrender of all |
| |
of the rights under the contract immediately before the related |
| |
| |
7 (1) | This paragraph applies where— |
| |
(a) | the relevant company was a party to an investment life insurance |
| 5 |
contract immediately before the beginning of the first accounting |
| |
period of the company beginning on or after 1 April 2008, |
| |
(b) | at all time since the contract was made the rights conferred by the |
| |
contract have been in the beneficial ownership of the company, |
| |
(c) | the company brings into account credits and debits in respect of the |
| 10 |
contract on the basis of fair value accounting, and |
| |
(d) | the relevant amount exceeds the fair value of the contract |
| |
immediately before the beginning of that accounting period. |
| |
(2) | In sub-paragraph (1)(d) “the relevant amount” means— |
| |
(a) | where section 541 of ICTA applies on the deemed surrender under |
| 15 |
paragraph 6(1), the amount specified in sub-paragraph (i) of |
| |
subsection (1)(b) of that section less the amount or value of any |
| |
relevant capital payments (as defined in subsection (5)(a) of that |
| |
| |
(b) | where section 543 of that Act applies on that deemed surrender, the |
| 20 |
amount specified in sub-paragraph (i) of subsection (1)(a) of that |
| |
section less the amount or value of any relevant capital payments (as |
| |
defined in subsection (3) of that section). |
| |
(3) | No amount is to be brought into account as a credit by virtue of paragraph 2 |
| |
in relation to the contract except to the extent that the aggregate of— |
| 25 |
(a) | the amount of the credit, and |
| |
(b) | the total of any other credits which have previously arisen in relation |
| |
to the contract by virtue of that paragraph, |
| |
| is greater than the excess mentioned in sub-paragraph (1)(d). |
| |
8 (1) | This paragraph applies where— |
| 30 |
(a) | the relevant company was a party to an investment life insurance |
| |
contract immediately before the beginning of the first accounting |
| |
period of the company beginning on or after 1 April 2008, |
| |
(b) | the company brings into account credits and debits in respect of the |
| |
contract otherwise than on the basis of fair value accounting, and |
| 35 |
(c) | the carrying value of the contract as recognised for accounting |
| |
purposes immediately before the beginning of that first accounting |
| |
period exceeds the fair value of the contract at that time. |
| |
(2) | No amount is to be brought into account as a debit by virtue of paragraph 2 |
| |
in relation to the contract except to the extent that the aggregate of— |
| 40 |
(a) | the amount of the debit, and |
| |
(b) | the total of any other debits which have previously arisen in relation |
| |
to the contract by virtue of that paragraph, |
| |
| is greater than the excess mentioned in sub-paragraph (1)(c). |
| |
|
| |
|
| |
|
| |
| |
Company gains from investment life insurance contracts: consequential |
| |
| |
| |
1 | ICTA is amended as follows. |
| 5 |
2 | Omit sections 539 to 551A. |
| |
3 (1) | Section 552 (information: duty of insurers) is amended as follows. |
| |
(2) | In subsection (3), omit— |
| |
(a) | the words from “(or” to “year)”, and |
| |
(b) | “, and the corresponding financial year,”. |
| 10 |
| |
| |
(i) | omit “section 546C(7)(a) of this Act and”, and |
| |
(ii) | for “the year and the insurance year end” substitute “the |
| |
insurance year ends”, and |
| 15 |
(b) | in paragraph (c), omit— |
| |
| |
(ii) | in sub-paragraph (i), “the amount or value of any relevant |
| |
| |
(iii) | in sub-paragraph (iii), the words from the beginning to “656 |
| 20 |
| |
(iv) | in sub-paragraph (v), the words from the beginning to “year |
| |
| |
| |
| 25 |
(i) | omit “section 546C(7)(a) of this Act (and”, |
| |
(ii) | omit the closing bracket after “2005”, and |
| |
(iii) | for “the year (and the insurance year)” substitute “the |
| |
| |
(b) | in paragraph (c), omit “section 546C(7)(a) of this Act (and” and the |
| 30 |
closing bracket after “2005”. |
| |
| |
(a) | in paragraph (a), omit “, or, where the policy holder is a company, |
| |
the financial year,”, and |
| |
(b) | in paragraph (b), for the words from “section 546C(7)(a)” to |
| 35 |
“insurance year)” substitute “section 514(1) of ITTOIA 2005, the |
| |
period of three months following the end of the insurance year”. |
| |
(6) | In subsection (8)(c), omit the words from “or” to “financial year”. |
| |
| |
(a) | in the words before paragraph (a), omit “or financial year”, |
| 40 |
(b) | in paragraph (a), for the words from “section 546C(7)(b)” to the end |
| |
substitute “subsection (1) of section 514 of ITTOIA 2005, the year of |
| |
assessment which includes the end of the insurance year mentioned |
| |
in subsection (3) and (4) of that section;”, and |
| |
|
| |
|
| |
|
(c) | in paragraph (b) omit “or financial year”. |
| |
| |
(a) | in the definition of “amount”, omit “section 553(3) of this Act and”, |
| |
(b) | in the definition of “chargeable event”, omit “this Chapter and”, |
| |
(c) | omit the definition of “financial year”, |
| 5 |
(d) | after that definition insert— |
| |
““insurance year” has the same meaning as in Chapter 9 |
| |
of Part 4 of ITTOIA 2005 (see section 499 of that Act);”, |
| |
(e) | in the definition of “the relevant year of assessment”, omit paragraph |
| |
(b) and the “or” before it, and |
| 10 |
(f) | omit the definitions of “section 546 excess” and “year”. |
| |
(9) | Omit subsection (11). |
| |
(10) | In subsection (13), omit “section 548A above or”. |
| |
4 | In section 552ZA(3) (information: supplementary provisions), omit “section |
| |
546C(7)(a) of this Act and”. |
| 15 |
5 | In section 552A(12) (tax representatives)— |
| |
(a) | omit “this Chapter and” in each place, and |
| |
(b) | for “have” substitute “has” in each place. |
| |
6 | Omit sections 553 to 553C. |
| |
7 | In paragraph 20 of Schedule 15 (qualifying policies)— |
| 20 |
(a) | in sub-paragraph (1)(a), omit “and 540 and 541”, and |
| |
(b) | in sub-paragraph (3)— |
| |
(i) | in paragraph (a), omit “and 540 and 541”, and |
| |
(ii) | omit paragraph (b) and the “and” before it. |
| |
| 25 |
8 | ITTOIA 2005 is amended as follows. |
| |
9 | In section 467(5) (persons liable: UK resident trustees), for paragraph (c) |
| |
| |
“(c) | neither section 465 nor section 466 applies.” |
| |
10 | In section 469(2) (two or more persons interested in policy or contract), omit |
| 30 |
“above and section 547(1) of ICTA (persons liable for tax etc.)”. |
| |
11 | Omit section 486 (exclusion of maturity of capital redemption policies in |
| |
| |
12 | In section 501 (part surrenders: loans)— |
| |
(a) | in subsection (1), insert “or” at the end of paragraph (a) and omit |
| 35 |
paragraph (c) and the “or” before it”, and |
| |
| |
13 | In section 541B(7) (section 541A: further definitions), omit paragraph (b) and |
| |
| |
14 | In Schedule 1 (consequential amendments), omit paragraphs 210 to 221 and |
| 40 |
| |
|
| |
|
| |
|
| |
| |
(a) | in FA 1989, section 90 and Schedule 9, |
| |
(b) | in F(No.2)A 1992, paragraph 15 of Schedule 9, |
| |
(c) | in FA 1995, section 55(8), |
| 5 |
(d) | in FA 1996, section 168(4) to (6) and paragraph 1A of Schedule 9, |
| |
(e) | in FA 1997, section 79, |
| |
(f) | in FA 1998, sections 88 and 89 and paragraphs 1 to 4 of Schedule 14, |
| |
(g) | in FA 1999, paragraphs 16 and 18(3) of Schedule 4, |
| |
(h) | in FA 2000, in section 46(2A), “547(1)(b)”, |
| 10 |
(i) | in FA 2001, section 83(2) and Part 1 of Schedule 28, |
| |
(j) | in FA 2002, section 87 and paragraph 21 of Schedule 25, |
| |
(k) | in FA 2003, section 171 and Schedule 34, |
| |
(l) | in FA 2004, paragraph 25 of Schedule 35, |
| |
(m) | in ITTOIA 2005, paragraph 493 of Schedule 1 and paragraph 86(3) of |
| 15 |
| |
(n) | in ITA 2007, paragraph 111 of Schedule 1, and |
| |
(o) | in FA 2007, section 29(1), paragraphs 45 and 46 of Schedule 7 and |
| |
paragraph 6(3) of Schedule 10. |
| |
| 20 |
16 (1) | The amendments made by this Schedule— |
| |
(a) | so far as relating to corporation tax, have effect for accounting |
| |
periods beginning on or after 1 April 2008, and |
| |
(b) | so far as relating to income tax, have effect for the tax year 2008-09 |
| |
and subsequent tax years. |
| 25 |
(2) | The amendments made by paragraph 3 to 5 also have effect in relation to |
| |
deemed surrenders under paragraph 6(1) of Schedule 13. |
| |
| |
| |
| |
| 30 |
| |
1 | ITTOIA 2005 is amended as follows. |
| |
|
| |
|
| |
|
2 | After section 172 insert— |
| |
| |
| |
Trade profits: changes in trading stock |
| |
| 5 |
172A | Meaning of “trading stock” |
| |
(1) | In this Chapter “trading stock”, in relation to a trade, means anything |
| |
(whether land or other property)— |
| |
(a) | which is sold in the ordinary course of trade, or |
| |
(b) | which would be so sold if it were mature or its manufacture, |
| 10 |
preparation or construction were complete. |
| |
| |
(a) | materials used in the manufacture, preparation or |
| |
construction of any such thing, |
| |
(b) | any services performed in the ordinary course of the trade, or |
| 15 |
(c) | any article produced, or any material used, in the |
| |
performance of any such services. |
| |
Transfers of trading stock between trade and trader |
| |
172B | Trading stock appropriated by trader |
| |
(1) | This section applies if trading stock of a person’s trade is |
| 20 |
appropriated by the person for any other purpose. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the amount which the stock appropriated would have |
| |
realised if sold in the open market at the time of the |
| |
appropriation is brought into account as a receipt, and |
| 25 |
(b) | the value of anything in fact received for it is left out of |
| |
| |
(3) | The receipt is treated as arising on the date of the appropriation. |
| |
172C | Trading stock supplied by trader |
| |
(1) | This section applies if something that— |
| 30 |
(a) | belongs to a person carrying on a trade, but |
| |
(b) | is not trading stock of the trade, |
| |
| becomes trading stock of the trade. |
| |
(2) | In calculating the profits of the trade— |
| |
(a) | the cost of the stock is taken to be the amount which it would |
| 35 |
have realised if sold in the open market at the time it became |
| |
trading stock of the trade, and |
| |
(b) | the value of anything in fact given for it is left out of account. |
| |
(3) | The cost is treated as being incurred on the date it became trading |
| |
| 40 |
|
| |
|