The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997

Explanatory Note

(This note is not part of the Regulations)

These Regulations re-enact the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1992 (S.I. 1992/1655, amended by S.I. 1993/3111, 1995/1916 and 1997/471) (“the 1992 Regulations”) for accounting periods beginning on or after 1st January 1995; they also re-enact the Friendly Societies (Taxation of Transfers of Business) Regulations 1995 (S.I. 1995/171, amended by S.I. 1997/472) (“the 1995 Regulations”) in relation to transfers of the whole or part of a friendly society’s business and to amalgamations and conversions of friendly societies taking place on or after 1st January 1995.

These Regulations omit provisions to be found in the 1992 Regulations and make a number of changes of substance; and these omissions and changes are indicated in the following paragraphs. (These Regulations also make minor and drafting amendments and omit provisions in the earlier Regulations which have become spent.)

Regulations 9 and 10 of the 1992 Regulations have no successor provisions in these Regulations.

Regulation 6 of these Regulations provides new definitions of the expressions “directive society”, “non-directive society”, “liabilities”, “periodical return” and “value”.

Regulation 7 of these Regulations inserts new definitions into section 431(2) of the Income and Corporation Taxes Act 1988 (“the Taxes Act”) to take account of legislative changes made by the Finance Act 1996, and regulation 8 of these Regulations makes a modification of section 432 of the Taxes Act which takes account of those changes.

Regulations 9 to 12 of these Regulations make new provision modifying section 432A of the Taxes Act.

Regulations 14 to 18, 29, 38 to 40, 43, 51 and 53 of these Regulations are new. They provide for the ambit of enactments in the Corporation Tax Acts to be confined to the taxable business of friendly societies.

Regulations 19 and 20 of these Regulations are also new, and make additional provision for computing the profits arising from pension business in the cases of those friendly societies which are non-directive societies.

Regulation 22 of these Regulations (in paragraphs (1), (3) and (4)) makes provision continuing the effect of regulation 10C of the 1992 Regulations which would otherwise have become spent on 1st January 1995.

Regulation 28 of these Regulations is new, and makes provision for computing the profits arising from overseas life assurance business carried on by friendly societies.

Regulation 31 of these Regulations is also new, and makes a modification of Schedule 19AA to the Taxes Act consequential upon the division of the basic life and general annuity business carried on by friendly societies into taxable and tax exempt business.

Regulation 32 of these Regulations makes new provision modifying section 82 of the Finance Act 1989.

Regulation 18 of the 1992 Regulations has been replaced by regulations 33 to 37 of these Regulations which modify and disapply provisions in sections 83 and 83A of the Finance Act 1989 (as substituted by paragraph 16(1) of Schedule 8 to the Finance Act 1995 and later amended by paragraph 4 of Schedule 31 to the Finance Act 1996). These regulations also make new provision as to how certain items shall be brought into account for corporation tax purposes.

Regulation 52 of these Regulations is new, and makes minor modifications of paragraph 12 of Schedule 9 to the Finance Act 1996.

The final regulation of these Regulations is regulation 54, which provides for these Regulations to supersede the 1992 Regulations and the 1995 Regulations.

These Regulations have effect, except as otherwise provided, for accounting periods beginning on or after 1st January 1995. Authority for the retrospective effect of these Regulations is given by section 463(4) of the Income and Corporation Taxes Act 1988.