|
| |
|
No deduction for capital allocations to with-profits policy holders |
| |
2 (1) | In section 82 of FA 1989 (calculation of profits), after subsection (2) insert— |
| |
“(2A) | But amounts are not allowed as such a deduction if they— |
| |
(a) | are allocated to holders of policies under which they are |
| |
eligible to participate in surplus, |
| 5 |
(b) | are of a capital nature, and |
| |
(c) | are not funded from amounts brought into account as part of |
| |
total income in line 19 of the revenue account prepared for |
| |
the purposes of Chapter 9 of the Prudential Sourcebook |
| |
(Insurers) in respect of the whole of the company’s long-term |
| 10 |
| |
(2B) | For the purposes of subsection (2A) above payments made in |
| |
connection with the reattribution of inherited estate are to be |
| |
regarded as being of a capital nature.” |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to amounts |
| 15 |
allocated on or after 22 April 2009 to holders of policies under which they are |
| |
eligible to participate in surplus. |
| |
Limits on loss relief for addition to non-profit funds |
| |
3 (1) | In ICTA, after section 434A insert— |
| |
“434AZA | Reduced loss relief for additions to non-profit funds |
| 20 |
(1) | Where this section applies in the case of a company carrying on life |
| |
assurance business, relief allowable under section 393A or Chapter 4 |
| |
of Part 10 in respect of losses incurred by the company in the life |
| |
assurance business in an accounting period is reduced in accordance |
| |
| 25 |
(2) | This section applies in the case of a company where— |
| |
(a) | there has been a relevant addition to one or more non-profit |
| |
funds in a period of account ending no later than the |
| |
accounting period (“the relevant period of account”) (see |
| |
| 30 |
(b) | the company is not a non-profit company in relation to the |
| |
relevant period of account and has not elected under |
| |
subsection (9) of section 83YA of the Finance Act 1989 to be |
| |
treated for the purposes of that section as if it were, and |
| |
(c) | condition A or B is met, |
| 35 |
| and, if the relevant period of account is not the period of account |
| |
ending with the accounting period (“the current period of account”), |
| |
| |
(3) | For the purposes of subsection (2), there is a relevant addition to a |
| |
non-profit fund in the relevant period of account if an amount is |
| 40 |
shown as a transfer from non-technical account in line 32 of the Form |
| |
58 of the non-profit fund in the periodical return for that period of |
| |
| |
(4) | Condition A is that there is a relevant book value election in relation |
| |
to assets of a non-profit fund of the company. |
| 45 |
|
| |
|
| |
|
(5) | For the purposes of subsection (4), there is a relevant book value |
| |
election in relation to assets of a non-profit fund if an amount is |
| |
shown in relation to the non-profit fund as the excess of the value of |
| |
net admissible assets in line 51 of the Form 14 of the non-profit fund |
| |
in the periodical return for the current period of account. |
| 5 |
(6) | Condition B is that the company is party to arrangements the main |
| |
purpose, or one of the main purposes, of which is to reduce the |
| |
relevant admissible value of assets of a non-profit fund of the |
| |
company, other than any structural assets. |
| |
(7) | For the purposes of subsection (6) (and section 434AZB), the |
| 10 |
“relevant admissible value” means the value reflected in line 89 of |
| |
Form 13 of the periodical return for the current period of account. |
| |
(8) | Condition C is that the surplus arising since the last valuation shown |
| |
in line 34 of the Form 58 of the non-profit fund, or any of the non- |
| |
profit funds, in relation to which condition A or B is met in the |
| 15 |
periodical return for the current period of account is a negative |
| |
| |
434AZB | Additions to non-profit funds: amount of loss reduction |
| |
(1) | The amount of the relief allowable as mentioned in section |
| |
434AZA(1) is reduced by whichever of the following is the least— |
| 20 |
(a) | the amount of the loss, |
| |
(b) | the amount specified in subsection (2), and |
| |
(c) | the amount specified in subsection (4). |
| |
(2) | The amount mentioned in subsection (1)(b) is— |
| |
(a) | where only condition A in section 434AZA is met, the |
| 25 |
relevant amount relating to the non-profit fund in relation to |
| |
which it is met or (where it is met in relation to more than one |
| |
non-profit fund) the sum of the relevant amounts relating to |
| |
| |
(b) | where only condition B is met, the amount of the relevant |
| 30 |
reduction relating to the non-profit fund in relation to which |
| |
it is met or (where it is met in relation to more than one non- |
| |
profit fund) the sum of the relevant reductions relating to |
| |
| |
(c) | where both condition A and condition B are met, the |
| 35 |
aggregate of the amounts in paragraphs (a) and (b). |
| |
| |
(a) | “relevant amount”, in relation to a non-profit fund, means the |
| |
amount shown in relation to the non-profit fund as the excess |
| |
of the value of net admissible assets in line 51 of the Form 14 |
| 40 |
of the non-profit fund in the periodical return for the current |
| |
period of account (as reduced by any amount which has had |
| |
effect to reduce relief for losses for a previous accounting |
| |
| |
(b) | “relevant reduction”, in relation to a non-profit fund, means |
| 45 |
the reduction of the relevant admissible value of assets of the |
| |
non-profit fund (other than structural assets) which is |
| |
attributable to the arrangements (as so reduced). |
| |
|
| |
|
| |
|
(4) | The amount mentioned in subsection (1)(c) is— |
| |
(a) | if the relevant period of account is the current period of |
| |
account, the amount referred to in section 434AZA(3) in the |
| |
case of the non-profit fund, or of each of the non-profit funds, |
| |
to which there has been a relevant addition in the relevant |
| 5 |
| |
(b) | otherwise, so much of the amount shown in line 31 of the |
| |
Form 58 of the non-profit fund or non-profit funds in the |
| |
periodical return for the current period of account as is |
| |
attributable to the amount so referred to. |
| 10 |
434AZC | Sections 434AZA and 434AZB: supplementary |
| |
(1) | For the purposes of sections 434AZA and 434AZB, a non-profit fund |
| |
required to support a with-profits fund is to be treated as not being |
| |
| |
(2) | Sections 434AZA and 434AZB apply to a non-profit part of a with- |
| 15 |
profits fund as if references to something shown in the Form 14 or |
| |
Form 58 of the non-profit fund in a periodical return were to what |
| |
would be so shown if there were a Form 14 or Form 58 of the non- |
| |
profit part of the with-profits fund in the periodical return. |
| |
(3) | In sections 434AZA and 434AZB— |
| 20 |
“arrangements” includes any agreement, understanding, |
| |
scheme, transaction or series of transactions (whether or not |
| |
legally enforceable), and |
| |
“structural assets” has the same meaning as in section 83XA of |
| |
the Finance Act 1989 (see subsection (3) of that section and |
| 25 |
any regulations made under it).” |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to |
| |
accounting periods ending on or after 22 April 2009 unless— |
| |
(a) | to the extent that section 434AZA would otherwise apply because |
| |
condition A in that section is met in relation to a non-profit fund, the |
| 30 |
relevant addition to the non-profit fund was made before that date, |
| |
| |
(b) | to the extent that section 434AZA would otherwise apply because |
| |
condition B in that section is so met, the relevant addition to the non- |
| |
profit fund and the arrangements were both made before that date. |
| 35 |
FAFTS and contingent loans |
| |
4 (1) | In paragraph 4(5) of Schedule 17 to FA 2008 (financing-arrangement-funded |
| |
transfers: companies with unrepaid contingent loan liabilities before first |
| |
period of account beginning on or after 1 January 2008), in the definition of |
| |
“R”, after “(7)(a) of that section” insert “in respect of amounts brought into |
| 40 |
account as transfers to non-technical account for periods of account |
| |
beginning on or after 1 January 2008”. |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to periods |
| |
of account beginning on or after 1 January 2008. |
| |
|
| |
|
| |
|
Apportionment: foreign business assets |
| |
5 (1) | Section 432E of ICTA (section 432B apportionment: participating funds) is |
| |
| |
(2) | In subsection (3)(a), omit “and foreign business assets”. |
| |
(3) | In subsection (4), in the definition of “A”, omit “and foreign business assets”. |
| 5 |
(4) | In subsection (4A), omit “or foreign business assets”. |
| |
6 | In consequence of the amendments made by paragraph 5, omit— |
| |
(a) | paragraph 19(4)(a) and (6) of Schedule 7 to FA 2007, and |
| |
(b) | paragraph 10(3)(c) of Schedule 17 to FA 2008. |
| |
7 (1) | The amendments made by paragraphs 5 and 6 have effect in relation to |
| 10 |
periods of account beginning on or after 1 January 2009 and ending on or |
| |
| |
(2) | But an insurance company may, in its company tax return for— |
| |
(a) | an accounting period beginning on or after 1 January 2008 but before |
| |
| 15 |
(b) | an accounting period beginning on or after 1 January 2009 and |
| |
ending before 22 April 2009, |
| |
| elect that the amendments made by paragraphs 5 and 6 have effect in |
| |
relation to that accounting period. |
| |
Value shifting attributable to transfer of business |
| 20 |
8 (1) | In section 32(1) of TCGA 1992 (value shifting: disposals within group |
| |
followed by disposal of shares), after “171(1)” insert “or 211”. |
| |
(2) | The amendment made by sub-paragraph (1) has effect for determining |
| |
whether section 30 of TCGA 1992 has effect as respects a disposal on or after |
| |
| 25 |
| |
| |
| |
Amendments of Part 6 of CTA 2009 |
| |
1 | Part 6 of CTA 2009 (relationships treated as loan relationships etc) is |
| |
| 30 |
2 (1) | Section 477(2) (overview of Part 6) is amended as follows. |
| |
(2) | After paragraph (a) insert— |
| |
“(aa) | Chapter 2A (disguised interest),”. |
| |
(3) | For paragraph (f) substitute— |
| |
“(f) | Chapter 6A (shares accounted for as liabilities),”. |
| 35 |
|
| |
|
| |
|
3 | After Chapter 2 insert— |
| |
| |
| |
486A | Introduction to Chapter |
| |
(1) | This Chapter provides for Part 5 to apply in relation to returns which |
| 5 |
are economically equivalent to interest (see section 485B). |
| |
(2) | For exclusions from this Chapter, see— |
| |
(a) | section 486C (return otherwise taxable), |
| |
(b) | section 486D (arrangement having no tax avoidance |
| |
| 10 |
(c) | section 486E (excluded shares). |
| |
486B | Disguised interest to be regarded as profit from loan relationship |
| |
(1) | Where a company is party to an arrangement which produces for the |
| |
company a return in relation to any amount which is economically |
| |
equivalent to interest, Part 5 applies as if the return were a profit |
| 15 |
arising to the company from a loan relationship. |
| |
(2) | For the purposes of this Chapter a return produced for a company by |
| |
an arrangement in relation to any amount is “economically |
| |
equivalent to interest” if (and only if)— |
| |
(a) | it is reasonable to assume that it is a return by reference to the |
| 20 |
time value of that amount of money, |
| |
(b) | it is at a rate reasonably comparable to what is (in all the |
| |
circumstances) a commercial rate of interest, and |
| |
(c) | at the relevant time there is no practical likelihood that it will |
| |
cease to be produced in accordance with the arrangement |
| 25 |
unless the person by whom it falls to be produced is |
| |
prevented (by reason of insolvency or otherwise) from |
| |
| |
(3) | In subsection (2)(c) “the relevant time” means the time when the |
| |
company becomes party to the arrangement or, if later, when the |
| 30 |
arrangement begins to produce a return for the company. |
| |
(4) | The credits and debits to be brought into account for the purposes of |
| |
Part 5 in respect of the return must be determined on an amortised |
| |
cost basis of accounting. |
| |
(5) | But if any of the return is not recognised in determining the |
| 35 |
company’s profit or loss for any period it is to be treated as |
| |
recognised using an amortised cost basis of accounting. |
| |
(6) | Where two or more persons are party to an arrangement which |
| |
produces a return such as is mentioned in subsection (1)— |
| |
(a) | for the persons (when taken together), but |
| 40 |
(b) | not for either (or any) of them individually, |
| |
| this section applies as if there were a profit arising to such (if any) of |
| |
them as are companies from a loan relationship of so much of the |
| |
return as is just and reasonable. |
| |
|
| |
|
| |
|
(7) | The only amounts which may be brought into account for |
| |
corporation tax purposes in relation to a return such as is mentioned |
| |
in subsection (1) in the case of any company are those which are |
| |
brought into account in accordance with this section (but see section |
| |
| 5 |
(8) | In subsection (4) “credits” and “debits” include exchange gains and |
| |
losses arising as a result of translating at different times the carrying |
| |
value of the return or the amount by reference to which the return |
| |
| |
(9) | In this Chapter “arrangement” includes any agreement, |
| 10 |
understanding, scheme, transaction or series of transactions |
| |
(whether or not legally enforceable), other than one which |
| |
constitutes a finance lease (within the meaning given by section 219 |
| |
| |
486C | Exclusion where return otherwise taxable |
| 15 |
(1) | This Chapter does not apply to an arrangement which produces a |
| |
return for a company if or to the extent that the return— |
| |
(a) | is charged to corporation tax as income of the company or |
| |
brought into account as income of the company for |
| |
corporation tax purposes no later than the time when |
| 20 |
amounts are brought into account in relation to the return in |
| |
accordance with section 486B, |
| |
(b) | arises from anything that would produce credits or debits in |
| |
relation to the company under Part 7 (derivative contracts) or |
| |
Part 8 (intangible fixed assets) but for any exception relating |
| 25 |
to particular credits or debits, or |
| |
(c) | arises from anything that would produce credits or debits in |
| |
relation to the company under Part 5 apart from this Chapter |
| |
but for any exception relating to particular credits or debits. |
| |
(2) | Subsection (1)(b) does not disapply this Chapter in the case of a |
| 30 |
return in relation to which section 641 (derivative contracts taxed on |
| |
chargeable gains basis) applies. |
| |
486D | Exclusion where arrangement has no tax avoidance purpose |
| |
(1) | This Chapter does not apply in relation to a return produced by an |
| |
arrangement to which a company is a party unless it is reasonable to |
| 35 |
assume that the main purpose, or one of the main purposes, of the |
| |
company being a party to the arrangement is to obtain a relevant tax |
| |
| |
(2) | But a company for which a return is produced by an arrangement to |
| |
which this Chapter would otherwise be prevented from applying by |
| 40 |
subsection (1) may elect that this Chapter is to apply in relation to the |
| |
| |
(3) | An election under subsection (2)— |
| |
(a) | may not be made by a company if section 486B applies to the |
| |
company in relation to the return in accordance with |
| 45 |
subsection (6) of that section, |
| |
(b) | must be made no later than the time when the arrangement |
| |
begins to produce a return for the company, and |
| |
|
| |
|
| |
|
| |
(4) | In this section “obtain a relevant tax advantage” means secure that |
| |
the return (or any part of it) is produced in a way which means that |
| |
its treatment for corporation tax purposes is more advantageous to |
| |
the company than it would be if it were— |
| 5 |
(a) | charged to corporation tax as income of the company, or |
| |
(b) | brought into account as income of the company for |
| |
corporation tax purposes, |
| |
| at the time when amounts would be brought into account in relation |
| |
to the return in accordance with section 486B. |
| 10 |
(5) | Nothing in this section applies in relation to a company for an |
| |
accounting period if the company is an excluded controlled foreign |
| |
| |
(6) | For this purpose a company is an excluded controlled foreign |
| |
company if any of its chargeable profits (within the meaning of |
| 15 |
Chapter 4 of Part 17 of ICTA)— |
| |
(a) | are apportioned for the accounting period in accordance with |
| |
section 752 of ICTA by virtue of section 747(3) of that Act, or |
| |
(b) | are not so apportioned because of section 748(1) of that Act. |
| |
| 20 |
(1) | This Chapter does not apply in relation to an accounting period (“the |
| |
relevant accounting period”) of a company (“the holding company”) |
| |
for which an arrangement produces a return for the company if the |
| |
arrangement involves only relevant shares held by the company |
| |
throughout the relevant period. |
| 25 |
(2) | In this section “the relevant period” means the period— |
| |
(a) | beginning with the later of— |
| |
(i) | the time when the holding company becomes party to |
| |
| |
(ii) | the time when the arrangement begins to produce a |
| 30 |
return for the company, and |
| |
(b) | ending with the earliest of— |
| |
(i) | the end of the relevant accounting period, |
| |
(ii) | the time when the holding company ceases to be |
| |
party to the arrangement, and |
| 35 |
(iii) | the time when the arrangement ceases to produce a |
| |
| |
(3) | For the purposes of this section an arrangement “involves only” |
| |
relevant shares if (and only if) the return produced reflects only an |
| |
increase in the fair value of the shares. |
| 40 |
(4) | For the purposes of subsection (3)— |
| |
(a) | “fair value”, in relation to relevant shares held by the holding |
| |
company, means an amount which the company would |
| |
obtain from a knowledgeable and willing purchaser of the |
| |
shares dealing at arm’s length, and |
| 45 |
|
| |
|