81 Acquisitions disregarded under insurance companies concession.U.K.
(1)This section applies for the purposes of corporation tax in relation to the disposal by a company (“the relevant company”) of any asset where—
(a)the asset is one acquired by the relevant company from an insurance company at a time when the relevant company and that insurance company were both members of the same group of companies;
(b)there was an occasion before the disposal (whether the occasion of the transfer of the asset to the relevant company or the occasion of an earlier transfer of the asset) in relation to which the non-statutory arrangements for groups of insurance companies were applied in the case of the transferring company;
(c)the application of those arrangements in relation to that occasion had the effect of preventing the cost of the asset’s acquisition by the transferring company (“the previous acquisition”) from being brought into account for tax purposes; and
(d)there has not, between that occasion and the making of the disposal, been any relevant event by reference to which the cost of the previous acquisition has been brought into account in computing the profits or losses of any company for tax purposes.
(2)Subject to subsection (5) below, where the computation of the relevant company’s profits or losses from any trade requires the cost of the acquisition of the asset by that company to be brought into account in the accounting period in which the disposal takes place, that cost shall be brought into account in that period as if it were an amount equal to the cost of the previous acquisition.
(3)Subject to subsections (4) and (5) below, where—
(a)the asset disposed of represents a creditor relationship,
(b)the disposal is such that paragraph 6 of Schedule 15 to the M1Finance Act 1996 (adjustment for pre-commencement trading relationships) would require an amount to be brought into account in the accounting period in which the disposal takes place in any case in which there is, for that relationship, a difference such as is mentioned in sub-paragraph (1) of that paragraph, and
(c)the cost of the previous acquisition is less than the amount which for the purposes of paragraph 5(2) of that Schedule would (apart from this subsection) be the notional closing value of the relationship on 31st March 1996,
the question whether an amount falls to be brought into account in accordance with paragraph 6(2) or (3) of that Schedule, and the amount (if any) falling to be so brought into account, shall be determined as if the notional closing value of the relationship on 31st March 1996 had been equal to the cost of the previous acquisition.
(4)In any case where the asset represents a creditor relationship in relation to which an election under paragraph 6(4) of Schedule 15 to the M2Finance Act 1996 has effect—
F1(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)paragraph 6(1) and (2) of that Schedule shall be treated as applying, notwithstanding [F2paragraph 6(4)] , if, in the case of that relationship, the amount referred to in subsection (3)(c) above exceeds the cost of the previous acquisition; and
(c)the amount falling by virtue of paragraph (b) above to be brought into account in accordance with paragraph 6(2) of that Schedule shall be determined as if the excess referred to in paragraph 6(2)(a) were the excess mentioned in paragraph (b) above.
(5)Where—
(a)there are two or more occasions such as are mentioned in paragraph (b) of subsection (1) above, and
(b)paragraph (d) of that subsection is satisfied in relation to each of them,
subsections (2) to (4) above shall have effect as if the references to the previous acquisition were references to the acquisition which is the previous acquisition in relation to the earliest of those occasions.
(6)In subsection (1)(d) above “relevant event”, in relation to any asset, means—
(a)a disposal of the asset; or
(b)any event by reference to which the conditions of the non-statutory arrangements for groups of insurance companies has required the cost of the previous acquisition to be brought into account in computing the profits or losses of any company for tax purposes.
(7)Section 170 of the M3Taxation of Chargeable Gains Act 1992 (meaning of groups etc.) shall apply for construing references in the preceding provisions of this section to a group of companies as it applies for the purposes of sections 171 to 181 of that Act.
(8)In the preceding provisions of this section—
“creditor relationship” has the same meaning as in [F3Part 5 of the Corporation Tax Act 2009 (see section 302(5))] ; and
“insurance company” means an insurance company within the meaning of Chapter I of Part XII of the Taxes Act 1988.
(9)References in this section to an asset shall be construed as if [F4section 129 of the Corporation Tax Act 2009] (cases where different assets are treated as the same) applied for the purposes of this section as it applies for [F5the purpose of calculating the profits of a company's trade] ; and [F6section 340(2) to (4) of the Corporation Tax Act 2009] (cases where different companies are treated as the same) shall apply for the purposes of this section as it applies for the purposes of [F6Part 5 of that Act]
(10)In this section any reference to the non-statutory arrangements for groups of insurance companies is a reference to so much of any arrangements made by the Board otherwise than by virtue of an enactment as—
(a)in relation to an accounting period beginning before 1st January 2000—
(i)provided for a single assessment of the trading profits of a group of insurance companies to be made on the principal company of the group; and
(ii)excluded trading profits on intra-group transfers of investments from the group assessment;
or
(b)contains transitional provision, in connection with the withdrawal of any arrangements falling within paragraph (a) above, for allowing trading profits on intra-group transfers to be excluded from assessments of members of groups of insurance companies that relate to accounting periods beginning on or after 1st January 1999 and before 1st January 2000.
(11)This section—
(a)shall not be construed as requiring any amount representing a gain on the disposal of the asset to be brought into account for tax purposes in so far as an amount representing that gain is or has already been brought into account, as an attributed gain, under any regulations made by virtue of Schedule 16 to the M4Finance Act 1993 (Forex transitional provisions); and
(b)shall be without prejudice to any power of the Board apart from this section to enforce any conditions subject to which any relief in accordance with the non-statutory arrangements for groups of insurance companies has been allowed.
(12)This section applies in relation to disposals by the relevant company made in accounting periods beginning on or after 1st January 1999.
[F7(13)If the relevant company changes from—
(a)not recognising a profit or loss on an asset until it is realised, to
(b)bringing assets into account in each period of account at a fair value,
then, in calculating the amount of any adjustment required under [F8Chapter 14 of Part 3 of the Corporation Tax Act 2009] (calculation of adjustment on change of basis), the amount to be taken into account as the cost of the asset in relation to a period of account before the change is the cost of the previous acquisition.]
Textual Amendments
F1S. 81(4)(a) repealed (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 458(2)(a), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)
F2Words in s. 81(4)(b) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 458(2)(b) (with Sch. 2 Pts. 1, 2)
F3Words in s. 81(8) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 458(3) (with Sch. 2 Pts. 1, 2)
F4Words in s. 81(9) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 458(4)(a) (with Sch. 2 Pts. 1, 2)
F5Words in s. 81(9) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 458(4)(b) (with Sch. 2 Pts. 1, 2)
F6Words in s. 81(9) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 458(4)(c) (with Sch. 2 Pts. 1, 2)
F7S. 81(13) inserted (24.7.2002 coming into force in accordance with s. 67(4)(b)) by 2002 c. 23, s. 67(3)(4)(b)
F8Words in s. 81(13) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 458(5) (with Sch. 2 Pts. 1, 2)
Marginal Citations