The Insurance Companies (Tax Exempt Business) Regulations 2007

Modifications of section 432A

7.—(1) Section 432A (apportionment of income and gains)(1) is modified as follows.

(2) In subsection (2)—

(a) omit the word “and” immediately following paragraph (b), and

(b) for paragraph (c) substitute—

“(c) PHI business,

(d) tax exempt life assurance business, and

(e) tax exempt other business.”

(3) In subsection (6)—

(a) in the fraction, for the denominator “A + B + C” substitute “A + B + C + D + E”,

(b) omit the word “and” immediately following the definition of B, and

(c) after the definition of C insert—

“D is the aggregate of—

(a) the mean of the opening and closing liabilities of the tax exempt life assurance business (but taking that mean to be nil if it would otherwise be below nil), and

(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts,

reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category; and

E is the aggregate of—

(a) the mean of the opening and closing liabilities of the tax exempt other business (but taking that mean to be nil if it would otherwise be below nil), and

(b) the mean of the appropriate parts (that is, the parts relating to that category) of the opening and closing amounts of the free assets amounts,

reduced (but not below nil) by the mean of the opening and closing net values of any assets directly referable to that category.”

(4) In subsection (6A)—

(a) in the fraction, for the denominator “A + B + C” substitute “A + B + C + D + E”, and

(b) for “and C” substitute “, C, D and E”.

(5) In subsection (6B)—

(a) in the fraction, for the denominator “A + B + C” substitute “A + B + C + D + E”, and

(b) for “and C” substitute “, C, D and E”.

(6) After subsection (6B) insert—

“(6BA) For the purposes of subsection (5) above “the relevant fraction”, in relation to tax exempt life assurance business, is—

where A, B, C, D and E have the same meaning as in subsection (6) above.

(6BB) For the purposes of subsection (5) above “the relevant fraction”, in relation to tax exempt other business, is—

where A, B, C, D and E have the same meaning as in subsection (6) above.”

(7) In subsection (6C), for “or (6B)” substitute “, (6B), (6BA) or (6BB)”.

(8) In subsection (7), for “and (6B)” substitute “, (6B), (6BA) and (6BB)”.

(9) In subsection (8ZA), for “and C” substitute “, C, D and E”.

(1)

Section 432A was inserted by paragraph 4 of Schedule 6 to the Finance Act 1990 (c. 29) and was relevantly amended by paragraph 13(2) of Schedule 8 to the Finance Act 1995, paragraph 8(3) and (4) of Schedule 7 to the Finance Act 2004 (c. 12), article 5(4) of S.I. 2005/3465, article 4 of S.I. 2007/1031 and paragraph 13]of Schedule 7, and paragraph 5 of Schedule 8, to the Finance Act 2007.