The Friendly Societies (Taxation of Transfers of Business) Regulations 1995

Explanatory Note

(This note is not part of the Regulations)

Section 463 of the Income and Corporation Taxes Act 1988 ( “section 463” and “the Taxes Act” respectively) confer powers upon the Treasury to make regulations relating to friendly societies. These Regulations exercise those powers as regards the business of friendly societies; and, in doing so, prescribe various modifications to the Corporation Tax Acts.

Regulation 1 provides for citation, commencement and effect and regulation 2 contains definitions.

Regulation 3 exercises the power contained in subsection (3) of section 463 so that the provisions of the Corporation Tax Acts which apply on the transfer of the whole or part of the long term business of an insurance company to another company shall have effect where the transferee is a friendly society. This regulation has effect in relation to transfers taking place on or after 2nd July 1990.

Regulation 4 exercises the power contained in subsection (2) of section 463; and applies in the cases mentioned in paragraph (1) of the regulation. The regulation is concerned with references in the Corporation Tax Acts to section 49 of the Insurance Companies Act 1982 (which relates to the sanction of the court where long term business of an insurance company is transferred). Section 49 of the 1982 Act does not apply in the cases mentioned in paragraph (1), and the regulation accordingly provides for references to that section to be omitted.

Regulation 5 also exercises the power contained in subsection (2) of section 463; and applies in the cases mentioned in paragraph (1) of the regulation. In those cases a charge to corporation tax on chargeable gains could arise under section 440 of the Taxes Act because assets are classified according to different categories before and after the event in question. The modifications of section 440 made by this regulation prevent such a charge from arising.

These Regulations have effect, except as otherwise provided, in relation to transfers, amalgamations and conversions taking place on or after 1st January 1990. Authority for the retrospective effect of these Regulations is given by subsection (4) of section 463.