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- Point in Time (19/07/2007)
- Original (As enacted)
Version Superseded: 18/02/2008
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Income and Corporation Taxes Act 1988, Section 444AC is up to date with all changes known to be in force on or before 11 September 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
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(1)This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”).
(2)If—
(a)[F2the transferee's line 31 amount in relation to the transfer], exceeds
(b)[F3the aggregate amount] of the liabilities to policy holders and annuitants transferred to the transferee [F4and of any relevant debts],
the excess is not to be regarded [F5as a business transfer-in] of the transferee for the purposes of section [F683(2)(e)] of the Finance Act 1989.
[F7(2A)Subject to subsections (2C) and (2D) below, subsection (2B) below applies if—
(a)the aggregate amount of the liabilities to policy holders and annuitants transferred to the transferee and of any relevant debts, exceeds
(b)[F2the transferee's line 31 amount in relation to the transfer].
(2B)Where this subsection applies—
(a)[F8the life assurance part of the excess] is to be taken into account as a receipt of the transferee in computing in accordance with the provisions of this Act applicable to Case I of Schedule D the profits of its life assurance business for the period of account of the transferee in which the transfer takes place (“the relevant period of account”); and
(b)the relevant proportion of the excess is to be taken into account as a receipt of the transferee in so computing the profits of [F9its gross roll-up business] for the relevant period of account;
and, for this purpose, [F10“the life assurance part of the excess” means the proportion of the excess that the liabilities of the transferee's life assurance business that are transferred bear to the total liabilities transferred and] “the relevant proportion”, in relation to [F11the transferee's gross roll-up business], is the proportion that the liabilities of [F12gross roll-up business] that are transferred bear to the total liabilities transferred.
(2C)Subsection (2B) above does not require [F13the life assurance part of the excess] to be taken into account as a receipt of the transferee in so computing the profits of its life assurance business for the relevant period of account if—
(a)transferred liabilities of an aggregate amount equal to [F13the life assurance part of the excess] are not taken into account in so computing those profits for that period of account, and
(b)the amount of the closing liabilities of that period of account is taken into account as opening liabilities in so computing those profits for the next period of account.
(2D)Subsection (2B) above does not require the relevant proportion of the excess to be taken into account as a receipt of the transferee in so computing the profits of [F14its gross roll-up business] for the relevant period of account if—
(a)transferred liabilities of an aggregate amount equal to the relevant proportion of the excess are not taken into account in so computing those profits for that period of account, and
(b)the amount of the closing liabilities of that period of account is taken into account as opening liabilities in so computing those profits for the next period of account.
(2E)In subsections (2C)(a) and (2D)(a) above “transferred liabilities” means—
(a)liabilities to policy holders or annuitants at the end of the relevant period of account that were transferred to the transferee, and
(b)payments made to discharge, during that period of account, liabilities to policy holders or annuitants that were transferred to the transferee.]
(3)F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F16(4)In this section “relevant debts” means debts which become debts of the transferee's long-term insurance fund as a result of the transfer.
(5)But if—
(a)[F17the aggregate amount of any relevant reinsurance amounts and of] the fair value, as at the date of the transfer, of the assets which become assets of the transferee's long-term insurance fund as a result of the transfer, exceeds
(b)[F2the transferee's line 31 amount in relation to the transfer],
the amount of any relevant debts for the purposes of this section is to be reduced (but not below nil) by the excess.
[F18(5A)In subsection (5)(a) above “relevant reinsurance amounts” means—
(a)amounts which are comprised in line 16 of Form 14 in the periodical return of the transferor covering the period ending immediately before the transfer (or would be so comprised if the transferor drew up a periodical return covering that period), or
(b)other amounts which arise under contracts of reinsurance in relation to which the reinsurer is the transferee and which, as at the date of the transfer, have fallen due to the transferor,
and which (in either case) do not become assets of the transferee's long-term insurance fund as a result of the transfer because (and only because) they arise under contracts of reinsurance in relation to which the reinsurer is the transferee.]
(6)In determining the amount of the liabilities transferred for the purposes of this section, there is to be disregarded any reduction in the transferee's liabilities resulting from reinsurance under a contract of reinsurance which is a relevant financial reinsurance contract (within the meaning of section 82C of the Finance Act 1989).
(7)But where—
(a)such a reduction results from reinsurance under a contract which was entered into by the transferor as cedant before the day on which the transfer takes place, and
(b)the transferor's rights and obligations under the contract are transferred to the transferee under the transfer,
the amount of the reduction that would (apart from this subsection) be disregarded under subsection (6) above shall be reduced (but not below nil) by the amount given by subsection (8) below or, if less, the amount given by subsection (9) below.
(8)The amount given by this subsection is the amount by which the liabilities at the end of the closing period which fell to be taken into account in computing in accordance with the provisions of this Act applicable to Case I of Schedule D the profits of the transferor's business for that period were reduced as a result of reinsurance under the contract.
(9)The amount given by this subsection is the amount given by paragraph (a) below reduced (but not below nil) by the amount given by paragraph (b) below—
(a)the amount given by this paragraph is the aggregate of the relevant amounts for any accounting period, and for this purpose the relevant amount for an accounting period is the amount in sub-paragraph (i) or (ii) below or, where applicable, the aggregate of those amounts—
(i)the amount by which the profits of the transferor's business, computed in accordance with the provisions of this Act applicable to Case I of Schedule D, were increased for that accounting period as a result of reinsurance under the contract;
(ii)the amount by which the losses of the transferor's business, so computed, were reduced for that accounting period as a result of reinsurance under the contract; and
(b)the amount given by this paragraph is the aggregate of the relevant amounts for any accounting period, and for this purpose the relevant amount for an accounting period is the amount in sub-paragraph (i) or (ii) below or, where applicable, the aggregate of those amounts—
(i)the amount by which the profits of the transferor's business, so computed, were reduced for that accounting period as a result of a reduction in reinsurance under the contract;
(ii)the amount by which the losses of the transferor's business, so computed, were increased for that accounting period as a result of a reduction in reinsurance under the contract.
(10)In subsections (8) and (9) above—
“the closing period” means the accounting period of the transferor ending with the day on which the transfer takes place;
“the transferor's business” means—
the transferor's life assurance business, and
[F19its gross roll-up business.]
(11)F20. . .
F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F1S. 444AC heading substituted (with effect in accordance with Sch. 9 para. 7(6) of the amending Act) by virtue of Finance (No. 2) Act 2005 (c. 22), Sch. 9 para. 7(5)
F2Words in s. 444AC(2)(2A)(5) substituted (31.12.2006 with effect in accordance with art. 1(2) of the amending S.I.) by The Insurance Companies (Corporation Tax Acts) (Miscellaneous Amendments) Order 2006 (S.I. 2006/3270), arts. 1(1), 6(a)
F3Words in s. 444AC(2)(b) substituted (with effect in accordance with Sch. 9 para. 7(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 9 para. 7(2)(a)
F4Words in s. 444AC(2)(b) inserted (with effect in accordance with Sch. 9 para. 7(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 9 para. 7(2)(b)
F5Words in s. 444AC(2)(3) substituted (1.1.2005 with effect in accordance with art. 1 of the amending S.I.) by The Insurance Companies (Corporation Tax Acts) Order 2004 (S.I. 2004/3266), art. 5(2)(b)
F6Words in s. 444AC(2) substituted (1.1.2005 with effect in accordance with art. 1 of the amending S.I.) by The Insurance Companies (Corporation Tax Acts) Order 2004 (S.I. 2004/3266), art. 5(3)
F7S. 444AC(2A)-(2E) inserted (with effect in accordance with Sch. 9 para. 7(6)(7) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 9 para. 7(3)
F8Words in s. 444AC(2B)(a) substituted (with effect in accordance with Sch. 11 para. 3(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 11 para. 3(2)(a)
F9Words in s. 444AC(2B)(b) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 36(2)(a) (with Sch. 7 Pt. 2)
F10Words in s. 444AC(2B) inserted (with effect in accordance with Sch. 11 para. 3(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 11 para. 3(2)(b)
F11Words in s. 444AC(2B) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 36(2)(b) (with Sch. 7 Pt. 2)
F12Words in s. 444AC(2B) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 36(2)(c) (with Sch. 7 Pt. 2)
F13Words in s. 444AC(2C) substituted (with effect in accordance with Sch. 11 para. 3(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 11 para. 3(3)
F14Words in s. 444AC(2D) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 36(3) (with Sch. 7 Pt. 2)
F15S. 444AC(3) omitted (31.12.2006 with effect in accordance with art. 1(2) of the repealing S.I.) by virtue of The Insurance Companies (Corporation Tax Acts) (Miscellaneous Amendments) Order 2006 (S.I. 2006/3270), arts. 1(1), 6(b)
F16S. 444AC(4)-(11) inserted (with effect in accordance with Sch. 9 para. 7(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 9 para. 7(4)
F17Words in s. 444AC(5)(a) inserted (with effect in accordance with Sch. 11 para. 3(7) of the amending Act) by Finance Act 2006 (c. 25), Sch. 11 para. 3(4)
F18S. 444AC(5A) inserted (with effect in accordance with Sch. 11 para. 3(7) of the amending Act) by Finance Act 2006 (c. 25), Sch. 11 para. 3(5)
F19Words in s. 444AC(10) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 36(4) (with Sch. 7 Pt. 2)
F20S. 444AC(11): opening words and definition of "fair value" repealed (with effect in accordance with Sch. 10 para. 17(2) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 10 para. 10(3)(b), Sch. 27 Pt. 2(10), Note
F21S. 444AC(11): definition of "insurance business transfer scheme" repealed (with effect in accordance with Sch. 9 para. 17(1) of the repealing Act) by Finance Act 2007 (c. 11), Sch. 9 para. 1(2)(c), Sch. 27 Pt. 2(9), Note
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