|
| |
|
Step 8 in section 76(7) of ICTA and the reference in Step 2(a) in subsection (5) |
| |
to the deduction for expenses as a result of section 76 of ICTA for an accounting |
| |
period are references to the deduction for expenses that would been made as a |
| |
result of that section for that period on the assumptions in subsections (7) and |
| |
| 5 |
(7) | The first assumption is that no account is taken of— |
| |
| |
(b) | any other claim under section 389 relating to a deficit for an accounting |
| |
period after the deficit period. |
| |
(8) | The second assumption is that all such adjustments are made as are required |
| 10 |
as a result of any sum having been carried back under the Corporation Tax |
| |
Acts to the accounting period mentioned in subsection (5), otherwise than as a |
| |
| |
(a) | the claim mentioned in subsection (6), or |
| |
(b) | any such other claim as is mentioned in subsection (7)(b). |
| 15 |
391 | Carry forward of surplus deficit to next accounting period |
| |
(1) | This rule applies if any of the deficit is not— |
| |
(a) | set off against the income and gains referred to in section 388(1), or |
| |
(b) | set off against the profits referred to in section 389(1) as the result of a |
| |
claim under that section. |
| 20 |
(2) | That deficit must be carried forward to the accounting period immediately |
| |
after the deficit period (“the next period”). |
| |
(3) | Any deficit so carried forward is treated for the purposes of the Corporation |
| |
Tax Acts (including sections 388 to 390) as expenses payable which— |
| |
(a) | are referable to the next period, and |
| 25 |
(b) | are to be brought into account at Step 3 in section 76(7) of ICTA |
| |
(expenses of insurance companies). |
| |
Exclusion of loan relationships of members of Lloyd’s |
| |
392 | Exclusion of loan relationships of members of Lloyd’s |
| |
(1) | This section applies to any loan relationship of a corporate member of Lloyd’s. |
| 30 |
(2) | This Part does not apply as respects the relationship so far as rights or liabilities |
| |
under it or securities representing it are— |
| |
(a) | assets forming part of the member’s premium trust fund, or |
| |
(b) | liabilities attached to that fund. |
| |
(3) | In this section “corporate member” and “premium trust fund” have the same |
| 35 |
meaning as in Chapter 5 of Part 4 of FA 1994 (Lloyd’s underwriters: |
| |
corporations etc) (see section 230(1) of that Act). |
| |
|
| |
|
| |
|
Determination of questions requiring apportionments |
| |
393 | General rules for some debtor relationships |
| |
(1) | This section applies if a debtor relationship of an insurance company is |
| |
represented by a liability which is a liability of its long-term insurance fund. |
| |
(2) | Any question arising for the purposes of the Corporation Tax Acts as to how |
| 5 |
far any credits or debits given for the purposes of this Part in respect of the |
| |
liability are referable to any particular category of the company’s long-term |
| |
business is determined as follows. |
| |
(3) | In the case of credits and debits within the rules in section 394, that section |
| |
| 10 |
(4) | In the case of other credits and debits, the relevant fraction of the credits or |
| |
debits is referable to a category of long-term business. |
| |
(5) | That fraction is determined by applying section 432A(6) to (6B) and (8) of ICTA |
| |
(apportionment of income and gains) as if— |
| |
(a) | the credits or debits were income not directly referable to any category |
| 15 |
| |
(b) | the references in section 432A(6) to assets directly referable to a |
| |
category of business were references to assets linked to that category. |
| |
394 | Special rules for some debtor relationships |
| |
(1) | This section sets out the rules referred to in section 393(3) as to how far certain |
| 20 |
credits or debits given for the purposes of this Part in respect of liabilities |
| |
representing a debtor relationship of an insurance company which are |
| |
liabilities of its long-term insurance fund are referable to any particular |
| |
category of its long-term business. |
| |
(2) | If the liabilities are liabilities of an internal linked fund of the company relating |
| 25 |
to one category of long-term business, the credits or debits are referable to that |
| |
| |
(3) | If the liabilities are liabilities of an internal linked fund of the company relating |
| |
to two or more such categories, the credits or debits are referable to those |
| |
categories in the same proportions as the linked assets in the fund are |
| 30 |
apportioned to them under section 432ZA(4) of ICTA (linked assets). |
| |
| |
(a) | the liabilities arise from deposit back arrangements, and |
| |
(b) | the business reinsured by the arrangements under which the deposit |
| |
back arrangements are made (“the reinsurance arrangements”) is |
| 35 |
within one category of long term business, |
| |
| the credits or debits are referable to that category. |
| |
| |
(a) | the liabilities arise from deposit back arrangements, and |
| |
(b) | the business reinsured by the reinsurance arrangements is within two |
| 40 |
| |
| the credits or debits are referable to those categories in the same proportions as |
| |
the relevant proportions of the liabilities reinsured by the arrangements which |
| |
are liabilities relating to those categories. |
| |
|
| |
|
| |
|
(6) | For the purposes of subsection (5) “relevant proportion”, in relation to |
| |
reinsured liabilities of any particular category of business, means the average |
| |
| |
(a) | the proportion of all the reinsured liabilities that are liabilities relating |
| |
to that category at the beginning of the period of account, and |
| 5 |
(b) | the proportion of all the reinsured liabilities that are liabilities relating |
| |
to that category at the end of that period. |
| |
(7) | Debits relating to interest payable in respect of the late payment of any benefits |
| |
are referable to the category of long-term business that comprises the effecting |
| |
and carrying out of the policies or contracts under which the benefits are |
| 10 |
| |
| |
Other special kinds of company |
| |
Investment trusts’ and venture capital trusts’ creditor relationships |
| |
395 | Investment trusts: profits or losses of a capital nature |
| 15 |
(1) | Profits or losses of a capital nature arising to an investment trust from a |
| |
creditor relationship may not be brought into account as credits or debits for |
| |
the purposes of this Part. |
| |
(2) | For the purposes of this section “profits or losses of a capital nature” means |
| |
| 20 |
(a) | are accounted for through the capital column of the income statement |
| |
in accordance with the Statement of Recommended Practice, or |
| |
(b) | would have been so accounted for if that Statement had been applied |
| |
| |
(3) | “The Statement of Recommended Practice”, in relation to an accounting period |
| 25 |
for which it is required or permitted to be used, means— |
| |
(a) | the Statement of Recommended Practice relating to Investment Trust |
| |
Companies, issued by the Association of Investment Trust Companies |
| |
in January 2003, as from time to time modified, amended or revised, or |
| |
(b) | any subsequent Statement of Recommended Practice relating to |
| 30 |
investment trusts, as from time to time modified, amended or revised. |
| |
(4) | The Treasury may by order amend the definition of “profits or losses of a |
| |
capital nature” in subsection (2), so far as it applies in relation to an investment |
| |
trust that prepares accounts in accordance with international accounting |
| |
| 35 |
(5) | An order under subsection (4) may make— |
| |
(a) | different provision for different cases, and |
| |
(b) | incidental, supplemental, consequential and transitional provision and |
| |
| |
|
| |
|
| |
|
396 | Venture capital trusts: profits or losses of a capital nature |
| |
(1) | Profits or losses of a capital nature arising to a venture capital trust from a |
| |
creditor relationship may not be brought into account as credits or debits for |
| |
the purposes of this Part. |
| |
(2) | For the purposes of this section “profits or losses of a capital nature” means |
| 5 |
| |
(a) | are accounted for through the capital column of the income statement |
| |
in accordance with the Statement of Recommended Practice, or |
| |
(b) | would have been so accounted for if the venture capital trust had been |
| |
an investment trust and that Statement had been applied correctly. |
| 10 |
(3) | In this section “the Statement of Recommended Practice” has the meaning |
| |
given in section 395(3) (investment trusts: profits or losses of a capital nature). |
| |
(4) | The Treasury may by order amend the definition of “profits or losses of a |
| |
capital nature” in subsection (2), so far as it applies in relation to a venture |
| |
capital trust that prepares accounts in accordance with international |
| 15 |
| |
(5) | An order under subsection (5) may make— |
| |
(a) | different provision for different cases, and |
| |
(b) | incidental, supplemental, consequential and transitional provision and |
| |
| 20 |
| |
| |
(1) | In calculating the income of a credit union for any accounting period, no credit |
| |
is to be brought into account for the purposes of this Part in respect of a loan |
| |
relationship of the union if a member of the union stands in the position of |
| 25 |
debtor in relation to the debt in question. |
| |
(2) | But subsection (1) does not apply if the credit union— |
| |
(a) | is obliged to make a return under section 887(2) of ITA 2007 for the |
| |
| |
(b) | has not done so within— |
| 30 |
(i) | 3 months after the end of the period, or |
| |
(ii) | such longer period as an officer of Revenue and Customs |
| |
| |
(3) | No debit is to be brought into account for the purposes of this Part in respect of |
| |
a loan relationship of a credit union if a member of the union stands in the |
| 35 |
position of creditor in relation to the debt in question. |
| |
|
| |
|
| |
|
| |
Special rules for particular kinds of securities |
| |
| |
| |
(1) | This Chapter sets out rules relating to the holding of particular kinds of |
| 5 |
| |
| |
(a) | sections 399 to 405 (gilt-edged securities), |
| |
(b) | sections 406 to 412 (deeply discounted securities: connected companies |
| |
| 10 |
(c) | sections 413 and 414 (funding bonds), |
| |
(d) | sections 415 to 419 (derivatives), and |
| |
(e) | section 420 (assumptions where options etc apply). |
| |
(3) | For other special rules about deeply discounted securities, see section 385 |
| |
(company partners’ shares where firm owns deeply discounted securities). |
| 15 |
| |
399 | Index-linked gilt-edged securities: basic rules |
| |
(1) | This section applies if a loan relationship is represented by an index-linked gilt- |
| |
| |
(2) | The amounts to be brought into account for the purposes of this Part are to be |
| 20 |
determined using fair value accounting. |
| |
(3) | But, in calculating those amounts, the adjustment specified in section 400 |
| |
(adjustments for changes in index) must be made if that section applies. |
| |
(4) | In this section and section 400 “index-linked gilt-edged securities” means any |
| |
gilt-edged securities under which the amounts of the payments are determined |
| 25 |
wholly or partly by reference to the retail prices index. |
| |
(5) | For the meaning of “gilt-edged securities”, see section 476(1). |
| |
400 | Index-linked gilt-edged securities: adjustments for changes in index |
| |
(1) | This section applies if— |
| |
(a) | the amounts to be brought into account for the purposes of this Part in |
| 30 |
respect of a gilt-edged security fall to be determined by reference to its |
| |
value at two different times, and |
| |
(b) | there is a change in the retail prices index between the earlier and the |
| |
| |
(2) | If that change is an increase, the carrying value of the security at the earlier time |
| 35 |
is increased by the same percentage as the percentage increase in the retail |
| |
prices index between those times. |
| |
|
| |
|
| |
|
(3) | If that change is a reduction, the carrying value of the security at the earlier |
| |
time is reduced by the same percentage as the percentage reduction in the retail |
| |
prices index between those times. |
| |
(4) | The Treasury may, in relation to any description of index-linked gilt-edged |
| |
securities, by order provide that— |
| 5 |
(a) | there are to be no adjustments under this section, or |
| |
(b) | an adjustment specified in the order is to be made instead. |
| |
(5) | An order under subsection (4)— |
| |
(a) | may not apply to a security issued before the making of the order, but |
| |
(b) | may make different provision for different descriptions of securities. |
| 10 |
(6) | The general rule is that the percentage increase or reduction in the retail prices |
| |
index is determined for the purposes of this section by reference to the |
| |
| |
(a) | the index for the month in which the earlier time falls, and |
| |
(b) | the index for the month in which the later time falls. |
| 15 |
(7) | But if the earlier time falls at the beginning of an accounting period which |
| |
begins with the first day of a month, the index for the previous month is used |
| |
for the purposes of subsection (6)(a). |
| |
| |
(1) | This section applies if a loan relationship is represented by— |
| 20 |
(a) | a strip of a gilt-edged security, or |
| |
(b) | any other gilt-edged security. |
| |
(2) | Subsections (3) and (4) apply if a person exchanges a gilt-edged security for |
| |
| |
(3) | The security is treated as having been redeemed at the time of the exchange by |
| 25 |
the payment to that person of its market value. |
| |
(4) | The person is treated as having acquired each strip for an amount equal to—![equation: cross[char[A],over[char[B],char[C]]]](missing.gif) |
| |
| |
A is the market value of the security at the time of the exchange, |
| |
B is the market value of the strip at that time, and |
| 30 |
C is the total of the market values at that time of all the strips received in |
| |
| |
(5) | Subsections (6) and (7) apply if strips of a gilt-edged security are consolidated |
| |
into a single gilt-edged security by being exchanged by any person for that |
| |
| 35 |
(6) | Each strip is treated as having been redeemed at the time of the exchange by |
| |
the payment to that person of the amount equal to its market value. |
| |
(7) | The person is treated as having acquired the security for the amount equal to |
| |
the total of the market values of all the strips given in the exchange. |
| |
|
| |
|
| |
|
(8) | For the meaning of “market value” and “strip” in relation to securities, see |
| |
section 402 and section 403 respectively. |
| |
402 | Market value of securities |
| |
(1) | References in section 401 to the market value of a security given or received in |
| |
exchange for another are references to its market value at the time of the |
| 5 |
| |
(2) | The Treasury may by regulations make provision for the purposes of section |
| |
401 and this section as to the way of determining the market value at any time |
| |
| |
| 10 |
(b) | any other gilt-edged security. |
| |
(3) | The regulations may make— |
| |
(a) | different provision for different cases, and |
| |
(b) | incidental, supplemental, consequential and transitional provision and |
| |
| 15 |
| |
(1) | In sections 401 and 402 “strip”, in relation to a gilt-edged security, means a |
| |
security issued under the National Loans Act 1968 (c. 13) which meets |
| |
| |
(2) | Condition A is that the security is issued for the purpose of representing the |
| 20 |
| |
(a) | a payment corresponding to a payment of interest or principal |
| |
remaining to be made under the gilt-edged security, or |
| |
(b) | two or more payments each corresponding to a payment to be so made. |
| |
(3) | Condition B is that the security is issued in conjunction with the issue of one or |
| 25 |
more other securities which, together with that security— |
| |
(a) | represent the right to, or |
| |
| |
| payments corresponding to every payment remaining to be made under the |
| |
| 30 |
(4) | Condition C is that the security is not itself a security that— |
| |
(a) | represents the right to, or |
| |
| |
| payments corresponding to a part of every payment remaining to be made |
| |
under the gilt-edged security. |
| 35 |
(5) | After the balance has been struck for a dividend on a gilt-edged security, a |
| |
payment to be made in respect of that dividend is treated for the purposes of |
| |
conditions A, B and C as not being a payment remaining to be made under that |
| |
| |
404 | Restriction on deductions etc relating to FOTRA securities |
| 40 |
(1) | A company which meets conditions A and B is not to bring into account for the |
| |
| |
|
| |
|