|
| |
|
(9D) | For the purposes of subsection (9C) above “the relevant reinsurance |
| |
fraction” is—![equation: over[times[char[R],char[L]],times[char[T],char[L]]]](missing.gif) |
| |
| |
RL is so much of TL as is reinsured under the fronting |
| |
reinsurance contract, and |
| |
TL is the amount of the total liabilities under the relevant |
| |
reinsured policies and contracts at the end of the accounting |
| |
| |
(9E) | For the purposes of subsections (9B) and (9C) above policies and |
| |
contracts are relevant reinsured policies and contracts in relation to |
| |
a fronting reinsurance contract if— |
| |
(a) | they are attributable to the company’s basic life assurance |
| |
and general annuity business, and |
| |
(b) | any or all of the risks under them are reinsured under the |
| |
fronting reinsurance contract.” |
| |
(4) | The amendments made by this paragraph have effect in relation to policies |
| |
and contracts made on or after 9 October 2007. |
| |
(5) | For the purposes of the operation of Step 6 in section 76(7) of ICTA in |
| |
relation to an accounting period of an insurance company beginning on or |
| |
after 9 October 2007, the adjusted amount of the acquisition expenses |
| |
(within the meaning of section 86(6) of FA 1989) of the company for any |
| |
earlier accounting period which is relevant for those purposes (a “relevant |
| |
earlier accounting period”) is to be arrived at as if the amendments made by |
| |
this paragraph had effect in relation to policies and contracts whenever |
| |
| |
(6) | And for those purposes, if the relevant earlier accounting period is a period |
| |
which began before 1 April 2004 the amount which would be required to be |
| |
deducted for that period at paragraph (d) of Step 2 by the subsection (9A) |
| |
inserted by sub-paragraph (3) is to be treated as an amount to be deducted |
| |
from the amount treated as the expenses of management of the company for |
| |
that period under section 75 of ICTA as it applied in relation to the relevant |
| |
earlier accounting period by virtue of section 76 of that Act. |
| |
(7) | In the application of the subsection (9C) inserted by sub-paragraph (3) by |
| |
virtue of sub-paragraph (6) the reference to Step 1 is to be read as a reference |
| |
to section 75 (as it so applied). |
| |
6 (1) | Section 85 of FA 1989 (charge of certain receipts of BLAGAB under Case VI) |
| |
| |
(2) | In subsection (2), for paragraph (b) substitute— |
| |
“(b) | any sum received under a reinsurance contract, except for |
| |
reinsurance commissions, however described, (but subject to |
| |
subsection (2ZA) below) and any sum calculated to any |
| |
extent by reference to expenses of the company brought into |
| |
account at Step 1 in section 76(7) of the Taxes Act 1988; or”. |
| |
(3) | In paragraph (f) of that subsection, after “Scheme” insert “, or from another |
| |
| |
|
| |
|
| |
|
(4) | After that subsection insert— |
| |
“(2ZA) | The reference in subsection (2)(b) above to reinsurance commissions |
| |
does not include so much of the relevant reinsurance fraction (see |
| |
subsection (9D) of section 76 of the Taxes Act 1988) of any |
| |
reinsurance commissions received from the reinsurer under a |
| |
fronting reinsurance contract (within the meaning of subsection (9B) |
| |
of that section) as does not exceed the amount arrived at under |
| |
subsection (9C) of that section in relation to the contract.” |
| |
(5) | The amendments made by this paragraph have effect in relation to |
| |
accounting periods beginning on or after 9 October 2007. |
| |
| |
7 | In section 83XA of FA 1989 (structural assets), omit— |
| |
(a) | subsections (10) and (11), and |
| |
(b) | in subsection (15), “or (10)”. |
| |
8 (1) | In section 431(2) of ICTA (interpretative provisions relating to insurance |
| |
companies), in the definition of “free assets amount”, after “long-term |
| |
business” insert “, other than any structural assets (within the meaning of |
| |
section 83XA of the Finance Act 1989),”. |
| |
(2) | The amendment made by sub-paragraph (1) has effect for periods of account |
| |
beginning on or after 1 January 2007. |
| |
Deposit back arrangements |
| |
9 (1) | In paragraph 3A of Schedule 11 to FA 1996 (apportionments), after sub- |
| |
| |
“(2A) | If any debits or credits relate to liabilities arising from deposit back |
| |
arrangements, they are (subject to sub-paragraph (2B)) referable to |
| |
the category of long-term business which comprises the business |
| |
reinsured by the arrangements under which the deposit back |
| |
| |
(2B) | If the business reinsured is not all of the same category of long- |
| |
term business, the debits and credits for any period of account are |
| |
referable to the categories of business in the same proportions as |
| |
the mean of the proportions at the beginning and end of the period |
| |
of account of the liabilities reinsured by the arrangements which |
| |
are liabilities of the categories of business.”; |
| |
| and, in sub-paragraph (4), after “(2)” insert “, (2A)”. |
| |
(2) | In section 431(2) of ICTA (interpretative provisions relating to insurance |
| |
companies), after the definitions of “contract of insurance” and “contract of |
| |
long-term insurance” insert— |
| |
““deposit back arrangements” means arrangements by which |
| |
an amount is deposited by the reinsurer under a contract of |
| |
reinsurance with the cedant;”; |
| |
| and, in the definition of “liabilities”, omit the words following paragraph (b). |
| |
(3) | The amendments made by this paragraph have effect in relation to periods |
| |
of account beginning on or after 1 January 2008 and ending on or after 12 |
| |
| |
|
| |
|
| |
|
| |
10 (1) | In ICTA, in subsection (2) of section 431 (interpretative provisions about |
| |
insurance companies), for the definition of “foreign currency assets” |
| |
| |
“foreign business assets”, in relation to an insurance company, |
| |
means assets, other than linked assets, which either— |
| |
(a) | are shown in the records of the company as being |
| |
primarily attributable to liabilities of the company’s |
| |
| |
(b) | are attributable, under the law of a country or |
| |
territory outside the United Kingdom, to a permanent |
| |
establishment of the company in that country or |
| |
territory through which it carries on foreign business; |
| |
and for this purpose “foreign business” means overseas life |
| |
assurance business or life reinsurance business to the extent |
| |
that it consists of the reinsurance of overseas life assurance |
| |
| |
(2) | After that section insert— |
| |
“431ZA | Election that assets not be foreign business assets |
| |
(1) | An insurance company may, in its company tax return for the first |
| |
accounting period of the company beginning on or after 1 January |
| |
2008 in which any of the assets of the company’s long-term insurance |
| |
fund would (apart from this section) be foreign business assets, elect |
| |
that none of the assets of the company’s long-term insurance fund |
| |
are to be regarded for the purposes of this Act as being foreign |
| |
| |
(2) | The election has effect for that accounting period and all subsequent |
| |
accounting periods of the company. |
| |
(3) | An election under subsection (1) is irrevocable.” |
| |
| |
| |
(b) | in section 432C(3), (4), (5), (7), (8) and (9), |
| |
(c) | in section 432E, in subsection (3)(a), in subsection (4), in the |
| |
definition of A, and in subsection (4A), |
| |
(d) | in section 440(4), and |
| |
| |
| for “currency” substitute “business”. |
| |
(4) | In section 432E of ICTA— |
| |
(a) | in subsection (3)(b), and |
| |
(b) | in subsection (4), in the definition of B, |
| |
| omit “and foreign currency assets”. |
| |
(5) | In paragraph 19(4)(b) of Schedule 7 to FA 2007, omit sub-paragraph (ii) (and |
| |
| |
(6) | The amendments made by this paragraph have effect in relation to periods |
| |
of account beginning on or after 1 January 2008. |
| |
|
| |
|
| |
|
(7) | But an insurance company may, in its company tax return for an accounting |
| |
period beginning on or after 1 January 2007 but before 1 January 2008, elect |
| |
that the amendments made by this paragraph have effect in relation to that |
| |
| |
| |
11 (1) | In section 431(2) of ICTA (interpretative provisions about insurance |
| |
companies), in the definition of “foreign currency assets”, for “three months” |
| |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to periods |
| |
of account beginning on or after 1 January 2007 but before 1 January 2008. |
| |
| |
12 (1) | Schedule 26 to FA 2002 (derivative contracts) is amended as follows. |
| |
(2) | In sub-paragraph (2) of paragraph 41, for “paragraphs 42 and 43” substitute |
| |
“the following paragraphs”. |
| |
(3) | After that paragraph insert— |
| |
“Application of section 103(3)(c) of the Finance Act 1996 |
| |
41A | Section 103(3)(c) of the Finance Act 1996 has effect for the purposes |
| |
of this Schedule as for the purposes of Chapter 2 of Part 4 of that |
| |
| |
(4) | Omit paragraph 42 (and the heading before it). |
| |
(5) | After that paragraph insert— |
| |
“Mutual trading and non-life mutual business |
| |
43 | Paragraphs (a) and (b) of section 103(3) of the Finance Act 1996 |
| |
have effect for the purposes of this Schedule as for the purposes of |
| |
Chapter 2 of Part 4 of that Act.” |
| |
(6) | The amendments made by sub-paragraphs (2) and (3) have effect in relation |
| |
to periods of account beginning on or after 1 January 2007. |
| |
(7) | The amendments made by sub-paragraphs (4) and (5) have effect in relation |
| |
to periods of account beginning on or after 1 January 2008 and ending on or |
| |
| |
| |
13 | In section 210A of TCGA 1992 (ring fencing of losses), after subsection (10) |
| |
| |
“(10A) | But where the BLAGAB profits for an accounting period are nil, the |
| |
policy holders’ share of the chargeable gains or allowable losses |
| |
accruing in the accounting period— |
| |
(a) | if there are Case I profits of the accounting period in respect |
| |
of its life assurance business, is nil, and |
| |
|
| |
|
| |
|
(b) | otherwise, is such proportion of the chargeable gains or |
| |
allowable losses as is just and reasonable; |
| |
| and for this purpose there are Case I profits if there are profits |
| |
computed in accordance with the provisions applicable to Case I of |
| |
Schedule D after making adjustments in respect of losses in |
| |
accordance with section 85A(4) of the Finance Act 1989.” |
| |
14 | In section 755A of ICTA (treatment of chargeable profits and creditable tax |
| |
apportioned to life assurance company), after subsection (11B) insert— |
| |
“(11BA) | But where the BLAGAB profits for the relevant accounting period |
| |
are nil, the relevant fraction— |
| |
(a) | if there are Case I profits of the accounting period in respect |
| |
of its life assurance business, is nil, and |
| |
(b) | otherwise, is such fraction as is just and reasonable; |
| |
| and for this purpose there are Case I profits if there are profits |
| |
computed in accordance with the provisions applicable to Case I of |
| |
Schedule D after making adjustments in respect of losses in |
| |
accordance with section 85A(4) of the Finance Act 1989.” |
| |
15 | The amendments made by paragraphs 13 and 14 have effect in relation to |
| |
accounting periods beginning on or after 1 January 2008 and ending on or |
| |
| |
UK distributions received by insurance companies |
| |
16 (1) | In ICTA, after section 95 insert— |
| |
“95ZA | Taxation of UK distributions received by insurance companies |
| |
(1) | If the total amount of relevant distributions received by a company |
| |
in an accounting period exceeds £50,000, those distributions are to be |
| |
taken into account in calculating for corporation tax purposes the |
| |
profits of the company in that period (and accordingly section 208 |
| |
does not apply in relation to those distributions). |
| |
(2) | A company (“company A”) receives a “relevant distribution” if— |
| |
(a) | it receives a distribution made by a company resident in the |
| |
United Kingdom (“company B”), |
| |
(b) | the value of the shares or stock in respect of which the |
| |
distribution is made (“the holding”) is materially reduced by |
| |
reason of the distribution, |
| |
(c) | a profit on the sale of the holding (to anyone other than |
| |
company B) would be taken into account in calculating |
| |
company A’s profits in respect of relevant insurance |
| |
| |
| |
(i) | the holding amounts to, or is an ingredient in a |
| |
holding amounting to, 10% of all holdings of the same |
| |
| |
(ii) | the period between the acquisition by company A of |
| |
the holding and that company first taking steps to |
| |
dispose of the holding does not exceed 30 days. |
| |
(3) | In this section “relevant insurance business” means any kind of |
| |
insurance business other than life assurance business. |
| |
|
| |
|
| |
|
(4) | Section 177(7) of TCGA 1992 (provision supplementing provision |
| |
corresponding to subsection (2)(d)(i) above) applies for the purposes |
| |
| |
(5) | Section 731(4) below (interpretation of “taking steps to dispose of |
| |
securities”) applies for the purposes of subsection (2)(d)(ii) as if the |
| |
reference to the securities were to the holding.” |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to |
| |
distributions made on or after 1 April 2008. |
| |
Clarification of scope of ICTA s.432A |
| |
17 (1) | Section 432A of ICTA (apportionment of income and gains) is amended as |
| |
| |
| |
(a) | for “This” substitute “Subject to section 432B, this”, |
| |
(b) | in paragraph (a), after “income” insert “or losses”, and |
| |
(c) | in paragraph (b), insert at the end “in accordance with the provisions |
| |
| |
(3) | After that subsection insert— |
| |
“(1ZA) | In subsection (1)(a) above “income” means— |
| |
(a) | income chargeable under Schedule A in respect of any |
| |
separate Schedule A businesses treated as carried on by the |
| |
company under section 432AA, |
| |
(b) | income chargeable under Schedule A in respect of |
| |
distributions treated by section 121(1)(a) of the Finance Act |
| |
2006 as profits of a Schedule A business carried on by the |
| |
| |
(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 |
| |
| |
(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 |
| |
| |
(g) | credits in respect of any derivative contracts (within the |
| |
meaning of Schedule 26 to the Finance Act 2002) of the |
| |
| |
(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 |
| |
| |
(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 |
| |
| |
(d) | debits in respect of any derivative contracts (within the |
| |
meaning of Schedule 26 to the Finance Act 2002) of the |
| |
| |
(e) | any debits brought into account by the company under Part |
| |
2 of Schedule 29 to the Finance Act 2002 (intangible fixed |
| |
| |
(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. |
| |
(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 |
| |
| |
(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 |
| |
| |
| |
(5) | In subsection (3), after “Income” insert “or losses”. |
| |
(6) | After that subsection insert— |
| |
“(3A) | Amounts falling within— |
| |
| |
(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 |
| |
| |
(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,”. |
| |
| |
(a) | in paragraph (a), for “income, gains or losses” substitute “income and |
| |
losses referred to in paragraph (a) of subsection (1) above, and gains |
| |
|
| |
|