House of Commons Public Bill Committee Proceedings

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Public Bill Committee Proceedings: May 2008
28

Finance Bill, continued

Mr Philip Hammond

Mr Mark Hoban

Mr David Gauke

Justine Greening

Withdrawn  91

Schedule  17,  page  247,  line  1,  leave out from beginning to end of line 43 on page

248.

Jane Kennedy

Agreed to  107

Schedule  17,  page  247,  line  17,  leave out from beginning to end of line 43 on page

248 and insert ‘carried on by the company,

(c)
income chargeable under Case V of Schedule D in respect of

any overseas property business treated as carried on by the

company under section 432AA,

(d)
other income of the company chargeable under Case V of

Schedule D,

(e)
distributions received by the company from companies

resident in the United Kingdom,

(f)
credits in respect of any creditor relationships (within the

meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the

company,

(g)
credits in respect of any derivative contracts (within the

meaning of Schedule 26 to the Finance Act 2002) of the

company,

(h)
any income of the company chargeable under Case III of

Schedule D in respect of annuities and other annual payments

within paragraph (b) of Case III of Schedule D as substituted

by section 18(3A),

(i)
any credits brought into account by the company under Part 3

of Schedule 29 to the Finance Act 2002 (intangible fixed

assets), and

(j)
any income of the company chargeable under Case VI of

Schedule D, other than profits of the company chargeable

under section 436A (gross roll-up business).

(1ZB)
In subsection (1)(a) above “losses” means—

(a)
losses in respect of any separate Schedule A businesses

treated as carried on by the company under section 432AA,

(b)
losses in respect of any overseas property businesses treated

as carried on by the company under that section,

(c)
debits in respect of any creditor relationships (within the

meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the

company,

(d)
debits in respect of any derivative contracts (within the

meaning of Schedule 26 to the Finance Act 2002) of the

company,

(e)
any debits brought into account by the company under Part 2

of Schedule 29 to the Finance Act 2002 (intangible fixed

assets), and

(f)
any losses of the company computed in the same way as

profits chargeable under Case VI of Schedule D, other than

any losses of gross roll-up business.

Public Bill Committee Proceedings: May 2008
29

Finance Bill, continued

(1ZC)
For determining as mentioned in subsection (1) above what parts of

income or gains arising from the assets of the company’s long-term

insurance fund are referable to PHI business (to the extent that it would

not be the case by virtue of subsections (1ZA) and (1ZB))—

(a)
“income” also includes profits shown in the technical account,

and

(b)
“losses” also includes losses so shown.”

    (4)
In subsection (1A), for “, all of the income and gains or losses referred to in

subsection (1) above is” substitute—

(a)
all of the income and losses referred to in paragraph (a) of

subsection (1) above, and

(b)
all of the gains and losses referred to in paragraph (b) of that

subsection,


are”.

      (5)
In subsection (3), after “Income” insert “or losses”.

      (6)
After that subsection insert—

“(3A)
Amounts falling within—

(a)
section 442A,

(b)
section 85(2C) of the Finance Act 1989, or

(c)
section 85A of that Act,


are directly referable to basic life assurance and general annuity

business.”

      (7)
In subsection (4A), after “Income” insert “or losses”.

      (8)
In subsection (5), for “income, gains or losses” substitute “income and losses

referred to in paragraph (a) of subsection (1) above, and any gains and losses

referred to in paragraph (b) of that subsection,”.

      (9)
In subsection (7)—

(a)
in paragraph (a), for “income, gains or losses” substitute “income and

losses referred to in paragraph (a) of subsection (1) above, and gains

and losses referred to in paragraph (b) of that subsection,” and insert

at the end “and”,

(b)
in paragraph (b), for “arising from the assets is, and gains or losses

accruing on the disposal of the assets are,” substitute “and losses

arising from the assets, and gains and losses accruing on the disposal

of the assets, are”, and

(c)
omit paragraph (c) and the “and” before it.

    (10)
In consequence of the preceding provisions, omit the provisions specified in

sub-paragraph (11).

    (11)
The provisions mentioned in sub-paragraph (10) are—

(a)
section 432AB(2) of ICTA,

(b)
section 502H of that Act,

(c)
paragraph 3 of Schedule 11 to FA 1996,

(d)
paragraph 19(4) of Schedule 12 to FA 1997,

(e)
paragraphs 36(1) and (3) and 138(2) and (3) of Schedule 29 to FA

2002,

(f)
paragraph 19(4) of Schedule 9 to F(No.2)A 2005, and

(g)
paragraphs 13(2) and 44 of Schedule 7, and paragraph 5 of Schedule

8, to FA 2007.

    (12)
The amendments made by this paragraph have effect in relation to accounting

periods beginning on or after 1 January 2008.

Public Bill Committee Proceedings: May 2008
30

Finance Bill, continued

“BLAGAB profits” etc

17A(1)
In section 431 of ICTA (interpretative provisions relating to insurance

companies), after subsection (2YA) insert—

“(2YB)
“BLAGAB profits”, in relation to an accounting period of an

insurance company, means the company’s BLAGAB income and

gains for the period reduced (but not below nil) by the company’s

BLAGAB deductions for the period.

(2YC)
“BLAGAB income and gains”, in relation to an accounting period of

an insurance company, means the aggregate of—

(a)
income chargeable for the period under Schedule A or Case

III, V or VI of Schedule D so far as referable (in accordance

with section 432A) to the company’s basic life assurance and

general annuity business,

(b)
distributions received in the period from companies resident

in the United Kingdom so far as so referable, and

(c)
chargeable gains so far as so referable accruing to the

company in the period, but (subject to section 210A of the

1992 Act) after deducting—

(i)
any allowable losses so referable and so accruing, and

(ii)
so far as they have not been allowed as a deduction

from chargeable gains in any previous accounting

period, any allowable losses so referable previously

accruing to the company.

(2YD)
“BLAGAB deductions”, in relation to an accounting period of an

insurance company, means the aggregate of—

(a)
amounts falling in respect of any non-trading deficits on the

company’s loan relationships to be brought into account in the

period in accordance with paragraph 4 of Schedule 11 to the

Finance Act 1996, and

(b)
the expenses deduction given by Step 8 in section 76(7) for the

period.”

      (2)
In section 755A(11C) of that Act (treatment of chargeable profits and

creditable tax apportioned to company carrying on life assurance business),

omit paragraph (b) and the “and” before it.

      (3)
In section 85A of FA 1989 (excess adjusted Case I profits), for subsections (6)

and (7) substitute—

“(6)
“The relevant income” means—

(a)
the company’s BLAGAB income and gains for the accounting

period (but excluding any amount within this section), and

(b)
profits of the company chargeable under Case VI of Schedule

D under section 436A of the Taxes Act 1988 (gross roll-up

business) for the accounting period.”

      (4)
In section 88 of that Act (meaning of “policy holders’ share of profits”), for

subsections (3) to (3B) substitute—

“(3)
For the purposes of subsection (1) above the relevant profits of a

company for an accounting period consist of the aggregate of—

(a)
the company’s BLAGAB profits for the period, and

Public Bill Committee Proceedings: May 2008
31

Finance Bill, continued

(b)
profits of the company chargeable under Case VI of Schedule

D under section 436A of the Taxes Act 1988 (gross roll-up

business) for the period.”

      (5)
Omit—

(a)
section 89(1B) of FA 1989,

(b)
in section 210A(10)(a) of TCGA 1992, “(within the meaning of

section 89(1B) of the Finance Act 1989)”,

(c)
paragraph 21(2) of Schedule 8 to FA 1995,

(d)
paragraph 2(1) of Schedule 11, and paragraph 56 of Schedule 14, to

FA 1996,

(e)
paragraph 6(1) of Schedule 33 to FA 2003,

(f)
in paragraph 9(2) of Schedule 7 to FA 2004, paragraphs (a) to (c) and

the words from”; and, in consequence of” to the end, and

(g)
paragraphs 58 and 67(2) of Schedule 7, and paragraphs 15(3) and

16(2) of Schedule 8, to FA 2007.

      (6)
The amendments made by this paragraph have effect in relation to accounting

periods beginning on or after 1 January 2008.’.

Jane Kennedy

Agreed to  108

Schedule  17,  page  249,  line  11,  at end insert—

‘Group relief: gross profits to exclude relevant profits

18A(1)
In section 434A of ICTA (computation of losses and limitation on relief),

insert at the end—

“(4)
For the purposes of section 403, where the surrendering company is an

insurance company which is charged to tax under the I minus E basis

in respect of its life assurance business for the surrender period, the

company’s gross profits of that period do not include its relevant

profits (within the meaning of section 88 of the Finance Act 1989) for

that period; and expressions used in this subsection and section 403

have the same meaning here as there.”

      (2)
The amendment made by sub-paragraph (1) has effect in relation to accounting

periods beginning on or after 1 January 2008.’.

Jane Kennedy

Agreed to  109

Schedule  17,  page  249,  leave out lines 21 to 25.

Jane Kennedy

Agreed to  110

Schedule  17,  page  249,  line  35,  at end insert—

  ‘(2A)
In paragraph 17 (restriction on losses carried forward), omit—

(a)
in sub-paragraph (3)(b), “or (13)”, “and charges on income” and “and

charges”, and

(b)
in sub-paragraph (4), “or (13)”.’.

Jane Kennedy

Agreed to  111

Schedule  17,  page  252,  line  5,  at end insert—

Public Bill Committee Proceedings: May 2008
32

Finance Bill, continued

‘Repeal of section 737D of ICTA

32A(1)
In ICTA, omit section 737D (power to provide that manufactured payments

are to be treated as income eligible for relief under section 438).

      (2)
In consequence of subsection (1), omit—

(a)
section 83(1) of FA 1995,

(b)
section 139(6) of FA 2006, and

(c)
paragraph 175 of Schedule 1 to ITA 2007.’.

Jane Kennedy

Agreed to  112

Schedule  17,  page  252,  line  5,  at end insert—

‘R&D relief

32B
In paragraph 12 of Schedule 12 to FA 2002 (insurance companies treated as

large companies), for the words following paragraph (b) substitute “the

company does not qualify as a small or medium-sized enterprise for the

purposes of Parts 1 to 3 of this Schedule or Schedule 20 to the Finance Act

2000.”’.

Jane Kennedy

Agreed to  113

Schedule  17,  page  252,  line  5,  at end insert—

‘Section 89(7) of FA 1989

32C(1)
In section 89(7) of FA 1989 (policy holders’ share of profits), for “in respect

of losses in accordance with section 85A(4)” substitute “in accordance with

section 85A(4) in respect of losses incurred in an accounting period in which

31 December 2002 is included or any later accounting period.”

      (2)
The amendment made by this paragraph has effect in relation to accounting

periods beginning on or after 1 January 2008 and ending on or after 15 May

2008.’.

Jane Kennedy

Agreed to  114

Schedule  17,  page  252,  leave out lines 6 to 8 and insert—

‘Commencement of Schedule 9 to FA 2007

33  (1)
Paragraph 17 of Schedule 9 to FA 2007 (transfers: commencement) is

amended as follows.

      (2)
In sub-paragraph (2), for “9, 10(3) to (5),” substitute “10(5),”.

      (3)
In sub-paragraph (3)—’.

Jane Kennedy

Agreed to  115

Schedule  17,  page  252,  line  14,  at end insert—

    ‘(4)
After sub-paragraph (4) insert—

“(4A)
The amendment made by paragraph 9 has effect in relation to

contracts entered into in a period of account beginning on or after 1

January 2008.”

Public Bill Committee Proceedings: May 2008
33

Finance Bill, continued

      (5)
Insert at the end—

“(6)
The amendments made by paragraph 10(3) and (4) have effect in

relation to assets transferred on or after 1 January 2008.”’.

Jane Kennedy

Agreed to  116

Schedule  17,  page  252,  line  29,  at end insert—

‘Repeal of spent provision

36
In section 88(5) of FA 1989 (policy holders’ share of profits), omit the words

after “January 1990”.’.

Schedule, as amended, Agreed to.

Clause 41 Agreed to.

Jane Kennedy

Agreed to  117

Schedule  18,  page  253,  line  39,  after ‘above,’ insert ‘or not so exempt by virtue of

subsection (3) above,’.

Jane Kennedy

Agreed to  118

Schedule  18,  page  254,  line  4,  at end insert—

‘Extension of section 463

3A
In subsection (1) of section 463 (application of Corporation Tax Acts to life or

endowment business carried on by friendly societies), for “the life or

endowment” substitute “long-term”; and, accordingly, in the title of that

section, for “Life or endowment” substitute “Long-term”.’.

Schedule, as amended, Agreed to.

Clause 42 to 48 Agreed to.

[Adjourned till Thursday at 9.00 a.m.