PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES
CHAPTER I INSURANCE COMPANIES, UNDERWRITERS AND CAPITAL REDEMPTION BUSINESS
F40Miscellaneous provisions relating to life assurance business
C1434 Franked investment income etc.
F68F77F821
Where an insurance company makes a payment representative of a distribution made by a company resident in the United Kingdom in respect of an asset of its long-term insurance fund, the payment is to be taken into account in computing its profits in accordance with the F84life assurance trade profits provisions unless the amount taken into account in accordance with section 83(2)(a) of the Finance Act 1989 includes the amount of the payment.
2
F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F703
F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C23A
F81So much of the policy holders' share of the franked investment income from investments of a company’s long-term insurance fund as is referable to its life assurance business shall be left out of account in determining, under F85section 32(1) of CTA 2010 (which relates to relief for small companies), the franked investment income forming part of the company’s profits for the purposes of F86Part 3 of that Act.
F713B
F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3C
F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3D
F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
M1Subject to subsection (5)below, the specified part shall be, in the case of any unrelieved income, the same fraction of it as the fraction which, on a computation of the profits of the company in respect of its life assurance business in accordance with the provisions applicable to Case Iof Schedule D (whether or not the company is in fact charged to tax under that Case for the relevant accounting period or periods),would be connoted by the words in section 433 “such part of those profits as belongs or is allocated to, or is reserved for, or expended on behalf of, policy holders or annuitants”. F72
5
If the income exceeds the profits as computed in accordance with the provisions applicable to Case Iof Schedule D other than section 433, the specified part shall be that fraction of the income so far as not exceeding the profits, together with the amount of the excess. F73
6
F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F746A
For the purposes of this section—
a
“the policy holders’ share” of any franked investment income is so much of that income as is not the shareholders’ share within the meaning of section 89 of the Finance Act 1989, F75. . .
ab
F79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ac
F79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1F87434A Computation of losses and limitation on relief.
1
F92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F88C3C42
Where for any accounting period the loss arising to an insurance company from its life assurance business falls to be computed in accordance with the F101life assurance trade profits provisions—
a
the loss resulting from the computation shall be reduced (but not below nil) by F96. . . —
i
F95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
any relevant non-trading deficit for that period on the company’s debtor relationships; and
b
if the whole or any part of that loss as so reduced is set off—
F104i
under section 37 of CTA 2010, or
ii
under Chapter 4 of Part 5 of CTA 2010,
F98any loss for that period under section 436A shall be reduced (but not below nil) by the total of the amounts set off as mentioned in sub-paragraphs (i) and (ii) above.
F892A
The reference in subsection F90(2)(a)(ii) above to a relevant non-trading deficit for any period on a company’s debtor relationships is a reference to the non-trading deficit on the company’s loan relationships F102. . . for the company’s basic life assurance and general annuity business if credits and debits given in respect of the company’s creditor relationships (within the meaning of F103Part 5 of CTA 2009) were disregarded.
3
In the case of a company carrying on life assurance business, no relief shall be allowable F91—
F105a
under Chapter 2, 4 or 6 of Part 4 of CTA 2010 (loss relief) or under Part 5 (group relief) of that Act,
F99aa
(where the company's life assurance business is not mutual business) in respect of any F106qualifying charitable donation, or
b
in respect of any amount representing a non-trading deficit on the company’s loan relationships that has been computed otherwise than by reference to debits and credits referable to that business,
against the policy holders’ share of the relevant profits for any accounting period.
For the purposes of this subsection “the policy holders’ share of the relevant profits” has the same meaning as in section F9489 of the Finance Act 1989.
F1004
For the purposes of F107section 105 of CTA 2010, where the surrendering company is an insurance company which is charged to tax under the I minus E basis in respect of its life assurance business for the surrender period, the company's gross profits of that period do not include its relevant profits (within the meaning of section 88 of the Finance Act 1989) for that period; and expressions used in this subsection and F107section 105 of CTA 2010 have the same meaning here as there.
F41434AZAReduced loss relief for additions to non-profit funds
1
Where this section applies in the case of a company carrying on life assurance business, relief allowable under F329section 37 of CTA 2010, or under Part 5 of that Act, in respect of losses incurred by the company in the life assurance business in an accounting period is reduced in accordance with section 434AZB.
2
This section applies in the case of a company where—
a
there has been a relevant addition to one or more non-profit funds in a period of account ending no later than the accounting period (“the relevant period of account”) (see subsection (3)),
b
the company is not a non-profit company in relation to the relevant period of account and has not elected under subsection (9) of section 83YA of the Finance Act 1989 to be treated for the purposes of that section as if it were, and
c
condition A or B is met,
and, if the relevant period of account is not the period of account ending with the accounting period (“the current period of account”), condition C is also met.
3
For the purposes of subsection (2), there is a relevant addition to a non-profit fund in the relevant period of account if an amount is shown as a transfer from non-technical account in line 32 of the Form 58 of the non-profit fund in the periodical return for that period of account.
4
Condition A is that there is a relevant book value election in relation to assets of a non-profit fund of the company.
5
For the purposes of subsection (4), there is a relevant book value election in relation to assets of a non-profit fund if an amount is shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account.
6
Condition B is that the company is party to arrangements the main purpose, or one of the main purposes, of which is to reduce the relevant admissible value of assets of a non-profit fund of the company, other than any structural assets.
7
For the purposes of subsection (6) (and section 434AZB), the “relevant admissible value” means the value reflected in line 89 of Form 13 of the periodical return for the current period of account.
8
Condition C is that the surplus arising since the last valuation shown in line 34 of the Form 58 of the non-profit fund, or any of the non-profit funds, in relation to which condition A or B is met in the periodical return for the current period of account is a negative amount.
F41434AZBAdditions to non-profit funds: amount of loss reduction
1
The amount of the relief allowable as mentioned in section 434AZA(1) is reduced by whichever of the following is the least—
a
the amount of the loss,
b
the amount specified in subsection (2), and
c
the amount specified in subsection (4).
2
The amount mentioned in subsection (1)(b) is—
a
where only condition A in section 434AZA is met, the relevant amount relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant amounts relating to them,
b
where only condition B is met, the amount of the relevant reduction relating to the non-profit fund in relation to which it is met or (where it is met in relation to more than one non-profit fund) the sum of the relevant reductions relating to them, and
c
where both condition A and condition B are met, the aggregate of the amounts in paragraphs (a) and (b).
3
In subsection (2)—
a
“relevant amount”, in relation to a non-profit fund, means the amount shown in relation to the non-profit fund as the excess of the value of net admissible assets in line 51 of the Form 14 of the non-profit fund in the periodical return for the current period of account (as reduced by any amount which has had effect to reduce relief for losses for a previous accounting period), and
b
“relevant reduction”, in relation to a non-profit fund, means the reduction of the relevant admissible value of assets of the non-profit fund (other than structural assets) which is attributable to the arrangements (as so reduced).
4
The amount mentioned in subsection (1)(c) is—
a
if the relevant period of account is the current period of account, the amount referred to in section 434AZA(3) in the case of the non-profit fund, or of each of the non-profit funds, to which there has been a relevant addition in the relevant period of account, and
b
otherwise, so much of the amount shown in line 31 of the Form 58 of the non-profit fund or non-profit funds in the periodical return for the current period of account as is attributable to the amount so referred to.
F41434AZCSections 434AZA and 434AZB: supplementary
1
For the purposes of sections 434AZA and 434AZB, a non-profit fund required to support a with-profits fund is to be treated as not being a non-profit fund.
2
Sections 434AZA and 434AZB apply to a non-profit part of a with-profits fund as if references to something shown in the Form 14 or Form 58 of the non-profit fund in a periodical return were to what would be so shown if there were a Form 14 or Form 58 of the non-profit part of the with-profits fund in the periodical return.
3
In sections 434AZA and 434AZB—
“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
“structural assets” has the same meaning as in section 83XA of the Finance Act 1989 (see subsection (3) of that section and any regulations made under it).
434BF42 Treatment of interest and annuities.
1
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
434CF43 Interest on repayment of advance corporation tax.
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
434DF44 Capital allowances: management assets.
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
434E Capital allowances: investment assets.
F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F7435 Taxation of gains reserved for policy holders and annuitants.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
436F8Pension business: separate charge on profits.
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F45C35436AGross roll-up business: separate charge on profits
F2321
The charge to corporation tax on income applies to profits arising to an insurance company from gross roll-up business.
2
For that purpose—
a
the gross roll-up business is to be treated separately, and
b
the profits from it are to be computed in accordance with the F233life assurance trade profits provisions.
3
4
If in any accounting period an insurance company incurs a loss, to be computed on the same basis as the profits, arising from its gross roll-up business—
a
the loss must be set off against the amount of any profits chargeable under this section for any subsequent accounting period, and
b
accordingly, the amount of the company's profits so charged in any such accounting period is to be treated as reduced by the amount of the loss or so much of that amount as cannot be relieved under this section against profits of an earlier accounting period.
5
F235Section 91 of CTA 2010 does not apply to a loss incurred by an insurance company on its gross roll-up business.
6
7
This section does not apply in relation to an insurance company for an accounting period if the profits of its long-term business for the accounting period are charged to tax under F234section 35 of CTA 2009 (charge on trade profits).
F45436BGains referable to gross roll-up business not to be chargeable gains
1
Gains referable to gross roll-up business are not chargeable gains.
2
For the purposes of this section “gains referable to gross roll-up business” means gains which—
a
accrue to an insurance company on the disposal by it of assets of its long-term insurance fund, and
b
are referable (in accordance with section 432A) to gross roll-up business.
C5C6C7437 General annuity business.
F113F1141A
In the computation F122under the I minus E basis of the F117relevant profits (within the meaning of section 88(1) of the Finance Act 1989) of an insurance company for any accounting period, new annuities paid by the company in that period shall be brought into account by treating an amount equal to the income limit for that period F118 as expenses payable which fall to be brought into account for that period at Step 3 in section 76(7).
1C
For the purposes of this section F115(but subject to subsections (1CA) to (1CD) below)—
a
“new annuity” means any annuity, so far as paid under a contract made by an insurance company in an accounting period beginning on or after 1st January 1992 and so far as referable to the company’s basic life assurance and general annuity business;
b
“the income limit” for an accounting period of an insurance company is the difference between—
i
the total amount of the new annuities paid by the company in that accounting period; and
d
the amounts exempt under section 717 of ITTOIA 2005F125 are so much of the payments under the new annuities as would be within the exemption in subsection (1) of that section if—
i
section 718 of that Act were omitted, and
ii
that exemption were an exemption applying in relation to companies as well as individuals.
F1161CA
Where a new annuity (“the actual annuity”) is a steep-reduction annuity, the income limit for an accounting period of the company paying the annuity shall be computed for the purposes of this section as if—
a
the contract providing for the actual annuity provided instead for the annuities identified by subsections (1CB) and (1CC) below; and
b
the consideration for each of those annuities were to be determined by the making of a just and reasonable apportionment of the consideration for the actual annuity.
1CB
The annuities mentioned in subsection (1CA)(a) above are—
a
an annuity the payments in respect of which are confined to the payments in respect of the actual annuity that fall to be made before the earliest time for the making in respect of the actual annuity of a reduced payment such as is mentioned in section 437A(1)(c); and
b
subject to subsection (1CC) below, an annuity the payments in respect of which are all the payments in respect of the actual annuity other than those mentioned in paragraph (a) above.
1CC
Where an annuity identified by paragraph (b) of subsection (1CB) above (“the later annuity”) would itself be a steep-reduction annuity, the annuities mentioned in subsection (1CA)(a) above—
a
shall not include the later annuity; but
b
shall include, instead, the annuities which would be identified by subsection (1CB) above (with as many further applications of this subsection as may be necessary for securing that none of the annuities mentioned in subsection (1CA)(a) above is a steep-reduction annuity) if references in that subsection to the actual annuity were references to the later annuity.
1CD
Subsections (1CA) to (1CC) above shall be construed in accordance with section 437A.
1D
In any case where—
a
a payment in respect of an annuity is made by an insurance company under a group annuity contract made in an accounting period beginning before 1st January 1992,
b
the company’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
c
the company’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall be treated for the purposes of this section, other than this subsection, as if the group annuity contract had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
1E
In any case where—
a
a payment in respect of an annuity is made by a reinsurer under a reinsurance treaty made in an accounting period beginning before 1st January 1992,
b
the reinsurer’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
c
the reinsurer’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall, as respects the reinsurer, be treated for the purposes of this section, other than this subsection, as if the reinsurance treaty had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
1F
In this section—
“group annuity contract” means a contract between an insurance company and some other person under which the company undertakes to become liable to pay annuities to or in respect of such persons as may subsequently be specified or otherwise ascertained under or in accordance with the contract (whether or not annuities under the contract are also payable to or in respect of persons who are specified or ascertained at the time the contract is made);
“reinsurance treaty” means a contract under which one insurance company is obliged to cede, and another (in this section referred to as a “reinsurer”) to accept, the whole or part of a risk of a class or description to which the contract relates.
F1082
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1093
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1104
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1115
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
F112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F46437A Meaning of “steep-reduction annuity” etc.
1
For the purposes of section 437 an annuity is a steep-reduction annuity if—
a
the amount of any payment in respect of the annuity (but not the term of the annuity) depends on any contingency other than the duration of a human life or lives;
b
the annuitant is entitled in respect of the annuity to payments of different amounts at different times; and
c
those payments include a payment (“a reduced payment”) of an amount which is substantially smaller than the amount of at least one of the earlier payments in respect of that annuity to which the annuitant is entitled.
2
Where there are different intervals between payments to which an annuitant is entitled in respect of any annuity, the question whether or not the conditions in subsection (1)(b) and (c) above are satisfied in the case of that annuity shall be determined by assuming—
a
that the annuitant’s entitlement, after the first payment, to payments in respect of that annuity is an entitlement to payments at yearly intervals on the anniversary of the first payment; and
b
that the amount to which the annuitant is assumed to be entitled on each such anniversary is equal to the annuitant’s assumed entitlement for the year ending with that anniversary.
3
For the purposes of subsection (2) above an annuitant’s assumed entitlement for any year shall be determined as follows—
a
the annuitant’s entitlement to each payment in respect of the annuity shall be taken to accrue at a constant rate during the interval between the previous payment and that payment; and
b
his assumed entitlement for any year shall be taken to be equal to the aggregate of the amounts which, in accordance with paragraph (a) above, are treated as accruing in that year.
4
In the case of an annuity to which subsection (2) above applies, the reference in section 437(1CB)(a) to the making of a reduced payment shall be construed as if it were a reference to the making of a payment in respect of that annuity which (applying subsection (3)(a) above) is taken to accrue at a rate that is substantially less than the rate at which at least one of the earlier payments in respect of that annuity is taken to accrue.
5
Where—
a
any question arises for the purposes of this section whether the amount of any payment in respect of any annuity—
i
is substantially smaller than the amount of, or
ii
accrues at a rate substantially less than,
an earlier payment in respect of that annuity, and
b
the annuitant or, as the case may be, every annuitant is an individual who is beneficially entitled to all the rights conferred on him as such an annuitant,
that question shall be determined without regard to so much of the difference between the amounts or rates as is referable to a reduction falling to be made as a result of the occurrence of a death.
6
Where the amount of any one or more of the payments to which an annuitant is entitled in respect of an annuity depends on any contingency, his entitlement to payments in respect of that annuity shall be determined for the purposes of section 437(1CA) to (1CC) and this section according to whatever (applying any relevant actuarial principles) is the most likely outcome in relation to that contingency.
7
Where any agreement or arrangement has effect for varying the rights of an annuitant in relation to a payment in respect of any annuity, that payment shall be taken, for the purposes of section 437(1CA) to (1CC) and this section, to be a payment of the amount to which the annuitant is entitled in accordance with that agreement or arrangement.
8
References in this section to a contingency include references to a contingency that consists wholly or partly in the exercise by any person of any option.
C9C8C10438 Pension business: exemption from tax.
C111
2
F136. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1263AA
F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F136. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1276A
F132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1286B
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6C
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6D
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6E
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
F134. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1299
F133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F10438A Pension business: payments on account of tax credits and deducted tax.
F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
438BF47 Income or gains arising from property investment LLP
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
438C Determination of policy holders’ share for purposes of s.438B
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
439 Restricted government securities.
F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
439AF48 Taxation of pure reinsurance business.
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
439BF49 Life reinsurance business: separate charge on profits.
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C12C15C20440F137 Transfers of assets etc.
C131
If at any time an asset (or a part of an asset) held by an insurance company ceases to be within one of the categories set out in subsection (4) below and comes within another of those categories, the company shall for the purposes of corporation tax be deemed to have disposed of and immediately re-acquired the asset (or part) for a consideration equal to its F146fair value at that time.
C14C16C172
Where—
F143a
an asset is acquired by a company as a result of an insurance business transfer scheme which has effect to transfer long-term business from any person (“the transferor”) to the company, and
b
the asset (or part of it) is within one of the categories set out in subsection (4) below immediately before the acquisition and is within another of those categories immediately afterwards,
the transferor shall for the purposes of corporation tax be deemed to have disposed of and immediately re-acquired the asset (or part) immediately before the acquisition for a consideration equal to its F146fair value at that time.
F1422A
F147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1452B
F147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Where, apart from this subsection, section F138171 or 173 the 1992 Act (transfers within a group) would apply to a disposal or acquisition by an insurance company of an asset (or part of an asset) which, immediately before the disposal or (as the case may be) immediately after the acquisition, is within one of the categories set out in F139paragraphs F148(a), (d) and (e) of subsection (4) below, that section shall not apply to the disposal or acquisition.
F140C18C194
The categories referred to in subsections (1) to (3) above are—
d
assets linked solely to basic life assurance and general annuity business;
C21f
other assets.
5
F151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1416
In a case where the profits of a company’s life assurance business are charged to tax F153under section 35 of CTA 2009 (charge on trade profits) this section has effect with the modification specified in section 440B(3).
440AF17Securities.
1
Subsection (2) below applies where the assets of an insurance company include securities of a class all of which would apart from this section be regarded for the purposes of corporation tax on chargeable gains as one holding.
C26C27C22C282
Where this subsection applies—
F154a
so many of the securities as are identified in the company’s records as securities by reference to the value of which there are to be determined benefits provided for under policies or contracts the effecting of all (or all but an insignificant proportion) of which constitutes the carrying on of—
F160i
basic life assurance and general annuity business, or
ii
gross roll-up business,
shall be treated for the purposes of corporation tax as a separate holding linked solely to that business,
c
F161. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Subsection (2) above also applies where the assets of an insurance company include securities of a class and apart from this section some of them would be regarded as a 1982 holding, and the rest as a F158section 104 holding, for the purposes of corporation tax on chargeable gains.
4
In a case within subsection (3) above—
a
the reference in any paragraph of subsection (2) above to a separate holding shall be construed, where necessary, as a reference to a separate 1982 holding and a separate F158section 104 holding, and
b
the questions whether such a construction is necessary in the case of any paragraph and, if it is, how many securities falling within the paragraph constitute each of the two holdings shall be determined in accordance with paragraph 12 of Schedule 6 to the Finance Act 1990 and the identification rules applying on any subsequent acquisitions and disposals.
5
Section F155105 of the 1992 Act shall have effect where subsection (2) above applies as if securities regarded as included in different holdings by virtue of that subsection were securities of different kinds.
F157F1566
In this section—
“1982 holding” has the same meaning as in section 109 of the 1992 Act;
“F158section 104 holding” has the same meaning as in section 104(3) of that Act; and
“securities” means shares, or securities of a company, and any other assets where they are of a nature to be dealt in without identifying the particular assets disposed or acquired.
F1577
In a case where the profits of a company’s life assurance business are charged to tax F164under section 35 of CTA 2009 (charge on trade profits) this section has effect with the modification specified in section 440B(4).
F50440B Modifications where tax charged under F18section 35 of CTA 2009.
1
F1651A
F166. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F166. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F169Subsection (1) of section 440 applies as if the only categories set out in subsection (4) of that section were—
a
assets of the F167long-term insurance fund, and
b
other assets.
4
Section 440A applies as if for paragraphs F170(a), (d) and (e) of subsection (2) there were substituted—
F171“
so many of the securities as are included in the company's long-term insurance fund shall be treated for the purposes of corporation tax as a separate holding which is an asset of that fund, and
b
any remaining securities shall be treated for those purposes as a separate holding which is not of the description mentioned in the preceding paragraph.”.
F1724A
Section 440(2) does not apply if either the transferor or the company by which the asset is acquired is a company whose profits are charged to tax F176under section 35 of CTA 2009 (or if they both are).
4B
5
F173. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F51440CModifications for change of tax basis
1
Subsection (2) makes provision for a case where—
a
subsection (4) of section 431G applies in relation to the profits of the life assurance business of an insurance company for any accounting period, but
b
the profits of that business for a succeeding accounting period fall to be charged to tax F237under section 35 of CTA 2009 (charge on trade profits) by virtue of subsection (3) of that section.
2
The loss referred to in section 431G(4)(b) (less any loss for the same accounting period set off under section 436A for any intervening accounting period and any amount deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989) may be F242relieved under section 45 of CTA 2010 against profits of that succeeding accounting period (without being reduced in accordance with section 434A(2)(a)).
3
In determining whether any loss has been set off under section 436A for any intervening accounting period, or whether any amount has been deducted for any such period in respect of the loss by virtue of section 85A(3)(b) of the Finance Act 1989, losses of earlier accounting periods are to be assumed to be set off before those of later accounting periods.
4
Subsection (5) makes provision for a case where—
a
a loss arises to an insurance company for an accounting period for which the profits of its life assurance business fall to be charged to tax F238under section 35 of CTA 2009 by virtue of section 431G(3)(b),
b
the profits of that business for a subsequent accounting period are charged to tax under the I minus E basis, and
5
The loss is to be treated for the purposes of the operation of section 436A in relation to the subsequent accounting period as if it were a loss arising from its gross roll-up business in the accounting period in which it arose.
6
Subsections (7) and (8) make provision for a case where—
a
the profits of the life assurance business of an insurance company for an accounting period are charged to tax under the I minus E basis,
b
the profits of that business for its next accounting period fall to be charged to tax F240under section 35 of CTA 2009 by virtue of section 431G(3), and
c
that prevents the giving of relief in accordance with section 86(8) of the Finance Act 1989 (acquisition expenses relieved in fractions under section 76).
7
Any relief which would have been so given in—
a
the next accounting period, or
b
any subsequent accounting period for which the profits of the company's life assurance business continue to be charged to tax F241under section 35 of CTA 2009,
may be given by set-off against any gains treated as accruing under section 213(1) of the 1992 Act at the end of the accounting period.
8
But if the profits of the company's life assurance business for a subsequent accounting period are charged to tax under the I minus E basis, any relief not previously given under subsection (7) is to be treated for the purposes of the operation of section 76 in relation to the first subsequent accounting period for which profits are so charged as if it were an amount which is to be relieved under that section by virtue of section 86(8) and (9) of the Finance Act 1989.
F52440DModifications in relation to BLAGAB group reinsurers
Schedule 19ABA (which makes modifications of this Act in relation to BLAGAB group reinsurers) shall have effect.
441 Overseas life assurance business.
F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F20441A Section 441: distributions.
1
F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F233
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
441BF53 Treatment of UK land.
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
442 Overseas business of U.K. companies.
1
M3Subsections (2) and (3) below apply where a company resident in the United Kingdom carries on insurance business outside the United Kingdom through a F180permanent establishment and—
a
that business, or part of it, together with the whole assets of the company used for the purposes of that business or part (or together with the whole of those assets other than cash), is transferred to a company not resident in the United Kingdom;
b
the business or part is so transferred wholly or partly in exchange for shares, or for shares and loan stock, issued by the transferee company to the transferor company; and
c
the shares so issued, either alone or taken together with any other shares in the transferee company already held by the transferor company, amount in all to not less than one quarter of the ordinary share capital of the transferee company.
2
In making any computation in accordance with the provisions F182applicable for the purposes of section 35 of CTA 2009 (charge on trade profits) of the profits or losses of the transferor company for the accounting period in which the transfer occurs, there shall be disregarded any profit or loss in respect of any asset transferred which, apart from this subsection, would fall to be taken into account in making that computation.
C303
4
F181. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F54C31442A Taxation of investment return where risk reinsured.
C32C331
Where an insurance company reinsures any risk in respect of a policy or contract attributable to its basic life assurance and general annuity business, the investment return on the policy or contract shall be treated as accruing to the company F183while the risk remains reinsured by the company under the reinsurance arrangement and shall be charged to tax under F186the charge to corporation tax on income.
2
The Board may make provision by regulations as to the amount of investment return to be treated as accruing in each accounting period during which the reinsurance arrangement is in force.
3
The regulations may, in particular, provide that the investment return to be treated as accruing to the company in respect of a policy or contract in any accounting period shall be calculated by reference to—
a
the aggregate of the sums paid by the company to the reinsurer during that accounting period and any earlier accounting periods by way of premium or otherwise;
b
the aggregate of the sums paid by the reinsurer to the company during that accounting period and any earlier accounting periods by way of commission or otherwise;
c
the aggregate amount of the net investment return treated as accruing to the company in any earlier accounting periods, that is to say, net of tax at such rate as may be prescribed; and
d
such percentage rate of return as may be prescribed.
F1843A
Where a transfer of the reinsurance arrangement from one insurance company (“the transferor”) to another (“the transferee”) is effected by novation or an insurance business transfer scheme, for the purpose of calculating the investment return to be treated as accruing to the transferee in respect of the policy or contract after the transfer, the references to the company in subsection (3)(a), (b) and (c) above include (as well as the transferee)—
a
the transferor, and
b
any insurance company from which the reinsurance arrangement was transferred on an earlier transfer effected by novation or an insurance business transfer scheme.
4
The regulations shall provide that the amount of investment return to be treated as accruing F185. . . in respect of a policy or contract in the final accounting period during which the policy or contract is in force is the amount, ascertained in accordance with regulations, by which the profit over the whole period during which the policy or contract, and the reinsurance arrangement, were in force exceeds the aggregate of the amounts treated as accruing in earlier accounting periods.
If that profit is less than the aggregate of the amounts treated as accruing in earlier accounting periods, the difference shall go to reduce the amounts treated by virtue of this section as arising in that accounting period from other policies or contracts, and if not fully so relieved may be carried forward and set against any such amounts in subsequent accounting periods.
5
Regulations under this section—
a
may exclude from the operation of this section such descriptions of insurance company, such descriptions of policies or contracts and such descriptions of reinsurance arrangements as may be prescribed;
b
may make such supplementary provision as to the ascertainment of the investment return to be treated as accruing to the company as appears to the Board to be appropriate, including provision requiring payments made during an accounting period to be treated as made on such date or dates as may be prescribed; and
c
may make different provision for different cases or descriptions of case.
6
In this section “prescribed” means prescribed by regulations under this section.
443 Life policies carrying rights not in money.
F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
444 Life policies issued before 5th August 1965.
F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
444AF27 Transfers of business.
F189C341
F195. . . 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”).
F1932
Any expenses payable which (F200making the assumptions in subsection (3B) below) would have fallen to be brought into account by the transferor in determining the deduction for expenses payable to be allowed under section 76 in computing profits for an accounting period following the period which ends with the day on which the transfer takes place shall, instead, be brought into account under and in accordance with that section by the transferee as expenses payable by him (and giving effect in the case of acquisition expenses, to section 86(6) to (9) of the Finance Act 1989).
3
Any loss which (F200making the assumptions in subsection (3B) below)—
a
b
F197. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2053YA
The conditions are—
a
the ownership condition set out in section 941 of CTA 2010, and
b
the tax condition set out in section 943 of that Act.
F1923ZA
F201. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1873A
Any subsection (2) excess (within the meaning of section 432F(2)) which (F200making the assumptions in subsection (3B) below) would have been available under section 432F(3) or (4) to reduce a subsection (3) figure (within the meaning of section 432F(1)) of the transferor in an accounting period following that which ends with the day on which transfer takes place—
a
shall, instead, be treated as a subsection (2) excess of the transferee, and
b
shall be taken into account in the first accounting period of the transferee ending after the date of the transfer (to reduce the subsection (3) figure or, as the case may be, to produce or increase a subsection (2) excess for that period),
in relation to the revenue account of the transferee dealing with or including the business transferred.
F2023B
The assumptions referred to in subsections (2), (3) and (3A) above are—
a
that the transferor had continued to carry on the business transferred after the transfer, and
b
where there is no accounting period of the transferor ending with the transfer date, that there was such an accounting period.
4
Where acquisition expenses are treated as F194expenses payable by the transferee by virtue of subsection (2) above, the amount deductible for the first accounting period of the transferee ending after the transfer takes place shall be calculated as if that accounting period began with the day after the transfer.
5
6
Any question arising as to the operation of subsection (5) above shall be determined F203in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
7
F199. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
F199. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F55444AZATransfers of life assurance business: F28gross roll-up business losses of the transferor
1
This section applies where—
a
an insurance business transfer scheme has effect to transfer life assurance business from one person (“the transferor”) to another (“the transferee”),
b
assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax in respect of that business under the I minus E basis,
c
the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax F293under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3), and
d
the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
2
Any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits chargeable under section 436A (a F294 “qualifying loss of the transferor”) shall instead be treated as a loss of the transferee F295. . . available to be set off against GRBP in relation to a period of account.
3
For the purposes of subsection (2) above “GRBP”, in relation to a period of account, is—
where—
P is the amount of such profits of the transferee's life assurance business for the period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable),
GRBTL is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
TL is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
4
Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of any F296qualifying loss of the transferor to which it would otherwise apply as is appropriate.
5
Any question arising as to the operation of subsection (4) above shall be determined F297in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
F55444AZBTransfers of life assurance business: F29trade losses of the transferor
1
This section applies where—
a
an insurance business transfer scheme has effect to transfer life assurance business from one person (“the transferor”) to another (“the transferee”),
b
assuming the transferor had continued to carry on the business transferred after the transfer, the amount of any profits would have been charged to tax F298under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3),
c
the profits in respect of the business transferred for the first period of account of the transferee ending after the date on which the transfer takes effect are charged to tax under the I minus E basis, and
d
the conditions in paragraphs (a) and (b) of section 343(1) are satisfied in relation to the business transferred (construing references to an event as to a transfer).
2
The relevant fraction of any loss which (assuming the transferor had continued to carry on the business transferred after the transfer) would have been available to be set off against profits of that business (a F299 “qualifying loss of the transferor”) shall instead be treated as a loss of the transferee F300. . . available to be set off against the amount of such profits chargeable under section 436A for a period of account as relate to the business transferred (that amount being determined in accordance with section 343(9) and (10), where applicable).
3
For the purposes of subsection (2) above “the relevant fraction”, in relation to a period of account, is—
where—
GRBTL is the mean of the opening and closing liabilities of the transferred gross roll-up business for the period of account, and
TL is the mean of the opening and closing liabilities of the transferred life assurance business for the period of account.
4
Where the transfer is of part only of the transferor's long-term business, subsection (2) above shall apply only to such part of the amount of any F301qualifying loss of the transferor to which it would otherwise apply as is appropriate.
5
Any question arising as to the operation of subsection (4) above shall be determined F302in the same manner as an appeal, and both the transferor and transferee shall be entitled to be a party to any proceedings.
F56F206444AATransfers of business: deemed periodical returns
1
This section applies where the whole of the long-term business of a person (“the transferor”) is transferred from that person–
a
by one insurance business transfer scheme, or
b
by two or more insurance business transfer schemes which take effect on the same date.
2
Where (apart from this subsection) there would not be a periodical return of the transferor covering a period ending immediately before the transfer date, there is to be deemed for the purposes of corporation tax to be a periodical return of the transferor covering the period—
a
beginning immediately after the last period ending before the transfer date which is covered by a periodical return of the transferor, and
b
ending immediately before the transfer date.
3
The periodical return deemed to exist by subsection (2) above is to be deemed to contain—
a
such entries as would be included in an actual periodical return of the transferor covering the period mentioned in subsection (2) above, and
b
such entries as would be included in an actual periodical return of the transferor covering the period—
i
beginning immediately after the end of the period mentioned in subsection (2) above, and
ii
ending immediately before the transfer had effect,
and the period mentioned in subsection (2) above is to be deemed to be a period of account (but not an accounting period) of the transferor.
4
There is to be deemed for the purposes of corporation tax to be a periodical return of the transferor—
a
covering the transfer date, and
b
containing the appropriate entries.
5
In subsection (4) above “appropriate entries” means such entries as would be included in an actual periodical return covering the transfer date—
a
in line 32 of Form 40, and
b
in line 11 of Form 14, in both columns (treating references in that form to “current year” as references to the time immediately after the transfer date and to “previous year” as references to the time immediately before the transfer date).
6
A transfer date covered by a periodical return deemed to exist by subsection (4) above is to be deemed to be a period of account of the transferor only for the purpose of taking into account profits under section 444ABD.
7
Where—
a
a periodical return deemed to exist by subsection (4) above is preceded by an actual periodical return of the transferor covering the period immediately before the transfer date, and
b
profits are to be taken into account under section 444ABD in the period of account deemed to exist by subsection (6) above,
those profits are to be deemed for the purposes of corporation tax to be profits arising on the last day of the period of account covered by the actual periodical return.
8
Any actual periodical return of the transferor covering a period which includes the transfer date is to be ignored for the purposes of corporation tax.
9
In this section and sections 444AB to 444AECC “the transfer date”, in relation to an insurance business transfer scheme, means the date on which it takes effect.
F57F207444ABF30Transfer schemes: transferor
F2081
This section applies where—
a
an insurance business transfer scheme has effect to transfer long-term business of a person (“the transferor”) to another person (“the transferee”), and
b
condition A or condition B is met.
2
Condition A is met if any of the assets of the transferor's long-term insurance fund which are transferred F209. . . by the insurance business transfer scheme are not, immediately after their transfer—
a
if the transferee is an insurance company F214or an insurance special purpose vehicle, assets of the transferee's long-term insurance fund, or
b
(“relevant non-transferred assets”).
3
Condition B is met if, immediately after the transfer date, the transferor—
a
does not carry on long-term business, but
b
holds any assets which, immediately before the transfer date, were assets of its long-term insurance fund (“retained assets”).
4
If there are relevant non-transferred assets or retained assets (or both) the relevant amount in relation to them (see subsection (5) below) is to be taken into account under section 83(2) of the Finance Act 1989 as an increase in value of the assets of the long-term insurance fund of the transferor for the relevant period of account (see subsection (6) below).
5
Section 444ABA makes provision for the calculation of the relevant amount in relation to relevant non-transferred assets; and section 444ABB makes provision for its calculation in relation to retained assets.
F2115A
In this section references to assets held by the transferor after the transfer do not include—
a
assets held on trust for the transferee, or
b
assets held to meet liabilities which have been wholly reinsured and which are intended to be transferred under an insurance business transfer scheme to the reinsurer.
F2126
In this section and sections 444ABA to 444AC “the relevant period of account” means F213the period of account of the transferor ending, or treated by section 444AA(2) as ending, immediately before the transfer date.
7
See section 444AA for the meaning of “the transfer date” in this section.
F2168
For the purpose of paragraph (2)(a), in relation to an insurance special purpose vehicle which is not an insurance company, “long-term insurance fund” has the meaning it has in paragraph 4(5) of Schedule 19ABA.
F58F226444ABARelevant non-transferred assets
1
For the purposes of section 444AB the relevant amount in relation to assets that are relevant non-transferred assets is—
where—
FVA is the fair value of the assets on the transfer date, and
F227BTO is the lesser of ABTO and AL13, where—
- a
ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, and
- b
AL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.
2
F228. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F228. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
F228. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
F228. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
F228. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
See section 444AA for the meaning of “the transfer date”F229. . . in this section.
F59444ABAANon-profit fund transferred assets
1
For the purposes of section 444AB the relevant amount in relation to assets that are non-profit fund transferred assets is—
where—
FVA is the fair value of the assets on the transfer date,
ABTO is any amount brought into account in respect of the assets as a business transfer-out and shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor for the period of account of the transferor including the transfer date, and
TL is the amount of any non-profit fund transferred liabilities which are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38, but not in line 61, in Form 14 in the periodical return for the period of account of the transferor ending (or treated as ending by section 444AA) immediately before the transfer date or, if there is no period of account of the transferor so ending (or treated as so ending), the amount of any liabilities which would be so shown if one did.
2
In subsection (1) “non-profit fund transferred liabilities” means such of the liabilities of the transferor's long-term insurance fund as are transferred from the transferor to the transferee by the insurance business transfer scheme and were, immediately before their transfer, liabilities of a non-profit fund of the transferor.
3
See section 444AA for the meaning of “the transfer date” in this section.
F60444ABBRetained assets
1
For the purposes of section 444AB the relevant amount in relation to assets that are retained assets F244is—
where—
FVA is the fair value of the assets on the transfer date,
ABDP is the amount of the profits to be taken into account as profits under section 444ABD,
RL13 is the amount by which AL13 exceeds VE, and
RRL is the value of any relevant retained liabilities immediately after the transfer date.
But the relevant amount is nil if it would otherwise be below nil.
F2451A
For the purposes of subsection (1) above—
a
AL13 is any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date;
b
VE is the amount (if any) by which VL32 exceeds VTL where—
i
VL32 is the value of the assets shown (or treated as shown) in line 32 of Form 40 in the periodical return of the transferor covering (or treated as covering) the transfer date, and
ii
VTL means the amount of the F246mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook) transferred by the insurance business transfer scheme; and
c
relevant retained liabilities are any liabilities of the company's long-term business which are owed by the company immediately after the transfer date and are shown (or treated as shown) in any of lines 17, 21 to 23 and 31 to 38 in Form 14 in a periodical return for the period of account ending (or treated as ending by section 444AA) immediately before the transfer date.
2
See section 444AA for the meaning of “the transfer date” in this section.
F61444ABBATransfers of business: election for transferee to pay tax of transferor
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 the transferor and the transferee jointly elect, the transferee (and not the transferor) is chargeable to any amount of additional corporation tax to which the transferor would otherwise be chargeable by virtue of section 444AB(4) in relation to relevant non-transferred assets.
3
An election under subsection (2) above—
a
is to be irrevocable, and
b
is to be made by notice to an officer of Revenue and Customs no later than the end of the period of 90 days beginning with the day following the transfer date,
and a copy of the notice containing the election must accompany the tax return of the transferee for the first accounting period ending after the transfer. Paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.
4
Where an election under subsection (2) above has been made, the transferor must inform the transferee of—
a
the amount of any additional corporation tax to which the transferor considers the election to apply, and
b
the day on which that tax is due and payable,
no later than the end of the period of 8 months beginning with the day following the transfer date.
5
Tax chargeable on the transferee by virtue of an election under subsection (2) above—
a
is due in accordance with section 59D of the Management Act M4 on the day on which it would have been due if no election had been made, and
b
for the purposes of that section, is to be treated as tax payable by the transferor (and not as tax payable by the transferee).
6
See section 444AA for the meaning of “the transfer date” in this section.
444ABCF62Transfer scheme transferring part of business: transferor
F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F63444ABDTransferor's period of account including transfer
1
Any profits representing the amount by which—
a
b
the value of the assets transferred by the insurance business transfer scheme shown (or treated as shown) in line 32 F248of Form 40 of the periodical return of the transferor for the period of account of the transferor including the transfer date,
are to be taken into account as profits of that period of account F249in accordance with subsections (1A) and (1C) below.
F2501A
Where the profits of the life assurance business of the transferor for a period of account are charged to tax F252under section 35 of CTA 2009 (charge on trade profits) by virtue of section 431G(3), the appropriate fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax F253under section 35 of that Act (and not otherwise).
1B
For the purposes of subsection (1A) above “the appropriate fraction” is the appropriate fraction for the purposes of section 432G(1).
1C
Where the profits of the life assurance business of the transferor for a period of account are charged to tax under the I minus E basis, the relevant fraction of the amount of the profits to which subsection (1) above applies is to be taken into account as profits of that period of account chargeable to tax under section 436A (and not otherwise).
1D
For the purposes of subsection (1C) above “the relevant fraction” is the relevant fraction for the purposes of section 432G(4).
1E
Where the value mentioned in paragraph (b) of subsection (1) above exceeds the amount mentioned in paragraph (a) of that subsection, the amount of the excess is not to be taken into account as a loss of the transferor.
2
See section 444AA for the meaning of “the transfer date” in this section.
F217444ACF32Transfer schemes: reduction of income of transferee
1
2
F220The condition is that the transferor did not carry on life assurance business that is mutual business during the relevant period of account.
3
F221. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
The amount which (apart from this section) would be regarded as other income of the transferee for the purposes of section 83(2)(e) of the Finance Act 1989 for the period of account of the transferee which includes the transfer date is to be reduced by an amount equal to the F222lesser of the transferred surplus and any positive amount shown (or treated as shown) in line 13 of Form 14 in the periodical return for the last period of account of the transferor ending before the transfer date.
5
In subsection (4) above “the transferred surplus”F223is VE – RBTO where—
a
VE has the same meaning as in section 444ABB, and
b
RBTO means so much of BTO as relates to relevant non-transferred assets transferred to the transferee where—
i
BTO has the same meaning as in section 444ABA, and
ii
“relevant non-transferred assets” has the same meaning as in section 444AB.
F2245A
Where the transfer is to more than one transferee, the amount of any reduction to be made in accordance with subsection (4) above is to be apportioned to each transferee on a just and reasonable basis.
6
See section 444AA for the meaning of “the transfer date”, and section 444AB for the meaning of “the relevant period of account”, in this section.
444ACZAF64F65Transfer schemes transferring part of business: reduction in income of transferee
F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
444ACAF66Transfers of business: transferor shares are assets of transferee's long-term insurance fund etc
F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
444ADTransfers of business: modification of s.83(2B) FA 1989
F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F225444AETransfers of business: FAFTS
1
Where an insurance business transfer scheme has effect to transfer the relevant financing arrangements entered into in relation to a non-profit fund of an insurance company (“the transferor”) to another person (“the transferee”), after the transfer—
a
they are to be treated for the purposes of sections 83YC and 83YD of the Finance Act 1989 as having been entered into by the transferee, but
b
the references in those sections to earlier periods of account of the transferee include earlier periods of account of the transferor.
2
But if the insurance business transfer scheme has effect—
a
to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the transferor, or
b
to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the transferor, or of the transferee or any of the transferees, ending after the transfer is to be made on a just and reasonable basis.
3
Subsection (4) below applies where—
a
relevant financing arrangements have been entered into in relation to a non-profit fund of an insurance company (“the old company”), and
b
as a result of any transaction other than an insurance business transfer scheme, another insurance company (“the new company”) becomes the debtor in respect of the money debt, or the cedant, under the financial reinsurance arrangements.
4
Where this subsection applies, after the transaction—
a
the relevant financing arrangements are to be treated for the purposes of sections 83YC and 83YD as having been entered into by the new company, but
b
the references in those sections to earlier periods of account of the new company include earlier periods of account of the old company, and
c
the transaction is not to be regarded as causing the condition in section 83YD(3) to be met in relation to the old company.
5
But if the transaction has effect—
a
to transfer some but not all of the relevant financing arrangements entered into in relation to the non-profit fund of the old company, or
b
to transfer all of those relevant financing arrangements but not all to one person,
any calculation required by virtue of section 83YC or 83YD in relation to a period of account of the old company, or of the new company or any of the new companies, ending after the transaction is to be made on a just and reasonable basis.
6
Expressions used in this section and section 83YC or 83YD have the same meanings here as there.
444AEATransfer schemes: anti-avoidance rule
1
This section applies where—
a
2
In subsection (1) above “transfer scheme arrangements” means an insurance business transfer scheme (“the relevant transfer scheme”) together with any relevant associated operations.
3
If a F260life assurance trade profits advantage is obtained by the transferor (see subsection (1) of section 444AEB), the amount of the F261. . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the F255long-term insurance fund of the transferor—
a
to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
i
for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
ii
where there is no such period, for the period of account of the transferor including the transfer date, and
b
to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
4
If a F262life assurance trade profits advantage is obtained by the transferee (see subsection (1) of section 444AEC), the amount of the F263. . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the F256period of account of the transferee in which the advantage is obtained by the transferee.
5
In this section and sections 444AEB F257to 444AECC“relevant associated operations”, in relation to the relevant transfer scheme, means—
a
any other insurance business transfer scheme,
b
any contract of reinsurance,
c
any reconstruction or amalgamation involving the transferor, a dependant of the transferor which is an insurance undertaking or the transferee, or
d
any surplus-increasing transfer of assets,
which is effected in connection with the relevant transfer scheme.
6
In subsection (5) above—
“dependant” and “insurance undertaking” have the same meaning as in the Insurance Prudential Sourcebook, and
“surplus-increasing transfer of assets” means a transfer of assets of the transferor's long-term insurance fund to the transferee which is not brought into account for any period of account of the transferee but increases the amount of total surplus shown in line 39 of Form 58 in any periodical return of the transferee.
7
See section 444AA for the meaning of “the transfer date” in this section.
444AEBF36Life assurance trade profits advantage: transferor
1
A F269life assurance trade profits advantage is obtained by the transferor if—
a
2
If F271a life assurance trade profits advantage is obtained by the transferor, the amount of F272the advantage is the aggregate of—
a
3
This section applies to a period of account if it is—
a
the period of account of the transferor covering the transfer date,
b
any earlier period of account of the transferor, or
c
where any relevant associated operations are effected in any later period of account, that period of account.
F2684
In this section and sections 444AEC, 444AECB and 444AECC—
5
See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
444AECF37Life assurance trade profits advantage: transferee
1
A F282life assurance trade profits advantage is obtained by the transferee if—
a
2
If F284a life assurance trade profits advantage is obtained by the transferee, the amount of F285the advantage is—
a
3
This section applies to a period of account if it is—
a
the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
b
the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
c
any intervening period of account.
4
F67444AECAParts of transfer scheme arrangements: anti-avoidance rule
1
This section applies where—
a
as a result of any part of transfer scheme arrangements involving the transfer of long-term business from one person (“the transferor”) to another (“the transferee”) a F303life assurance trade profits advantage is obtained by the transferor or the transferee (or by both), and
b
the sole or main purpose, or one of the main purposes, of that part of the transfer scheme arrangements is the obtaining of that F304. . . advantage.
2
In subsection (1) above “transfer scheme arrangements” has the same meaning as in section 444AEA.
3
If a F305life assurance trade profits advantage is obtained by the transferor (see subsection (1) of section 444AECB), the amount of the F306. . . advantage (see subsection (3) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferor—
a
to the extent that the advantage is obtained by the transferor in the period of account covering the transfer date or any earlier period of account—
i
for the period of account of the transferor ending (or treated as ending) immediately before the transfer date, or
ii
where there is no such period, for the period of account of the transferor including the transfer date, and
b
to the extent that the advantage is obtained by the transferor in any later period of account of the transferor in which any relevant associated operations are effected, for that later period of account.
4
If a F307life assurance trade profits advantage is obtained by the transferee (see subsection (1) of section 444AECC), the amount of the F308. . . advantage (see subsection (2) of that section) is to be taken into account as an increase in value of the assets of the long-term insurance fund of the transferee for the period of account of the transferee in which the advantage is obtained by the transferee.
5
See section 444AA for the meaning of “the transfer date”, and section 444AEA for the meaning of “relevant associated operations”, in this section.
F67444AECBParts of transfer scheme arrangements: F38life assurance trade profits advantage transferor
1
A F309life assurance trade profits advantage is obtained by the transferor if—
a
F310section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
b
F310section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for any part of the transfer scheme arrangements.
2
But if any of the relevant associated operations would, by itself, cause the F311section 35 profits to be greater or the F312section 35 losses to be less than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a F313life assurance trade profits advantage is obtained by the transferor.
3
If F314a life assurance trade profits advantage is obtained by the transferor, the amount of F315the advantage is the aggregate of—
a
the amounts (if any) by which F316section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, and
b
the amounts (if any) by which F316section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
4
This section applies to a period of account if it is—
a
the period of account of the transferor covering the transfer date,
b
any earlier period of account of the transferor, or
c
where any relevant associated operations are effected in any later period of account, that period of account.
5
6
F67444AECCParts of transfer scheme arrangements: F39life assurance trade profits advantage transferee
1
A F320life assurance trade profits advantage is obtained by the transferee if—
a
F321section 35 profits of its life assurance business for a period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for any part of the transfer scheme arrangements, or
b
F321section 35 losses of its life assurance business for such a period of account are, or at the relevant time are expected to be, greater than they would be but for the any part of the transfer scheme arrangements.
2
But if any of the relevant associated operations would, by itself, cause the F322section 35 profits to be greater, or the F323section 35 losses to be less, than they would be but for that operation, the amount by which those profits would be greater or those losses would be less shall be taken into account in determining whether a F324life assurance trade profits advantage is obtained by the transferor.
3
If F325a life assurance trade profits advantage is obtained by the transferee, the amount of F326the advantage is—
a
the amount by which F327section 35 profits for each period of account to which this section applies are, or at the relevant time are expected to be, less than they would be but for the relevant part of the arrangements, or
b
the amount by which F327section 35 losses for each such period of account are, or at the relevant time are expected to be, greater than they would be but for the relevant part of the arrangements.
4
This section applies to a period of account if it is—
a
the first period of account of the transferee ending after the transfer date or after the effecting of the first of any relevant associated operations (if that occurs before the transfer date),
b
the second period of account of the transferee ending after the transfer date or after the effecting of the last of any relevant associated operations (if that occurs after the transfer date), or
c
any intervening period of account.
5
See section 444AA for the meaning of “the transfer date”, section 444AEA for the meaning of “relevant associated operations”, section 444AEB for the meaning of “ F328section 35 profits” and “ F328section 35 losses” and “the relevant time” and section 444AECB for the meaning of “the relevant part of the arrangements”, in this section.
444AEDClearance: no avoidance or group advantage
1
F288Sections 444AEA and 444AECA do not apply in relation to the transferor or the transferee if, on an application under this section, the Commissioners for Her Majesty's Revenue and Customs (“the HMRC Commissioners”) have given a notice under subsection (2) below.
2
A notice under this subsection is a notice stating that the HMRC Commissioners are satisfied—
a
that the obtaining of a F289life assurance trade profits advantage by the applicant is not the sole or main purpose of the whole or any part of the transfer scheme arrangements, or
b
that the transferor and the transferee are members of the same group of companies and that there is no advantage to the group arising from any F289life assurance trade profits advantage obtained by the transferor or by the transferee.
3
For the purposes of this section there is no advantage to a group arising from any F290life assurance trade profits advantage obtained by the transferor or by the transferee if—
a
as a result of transfer scheme arrangements, there is an increase in the liability to corporation tax of one or more companies which are members of the group of companies, and
b
the amount (or aggregate amount) of that increase is not less than the reduction in the liability to corporation tax of the transferor or the transferee (or both) arising from the obtaining of the F290life assurance trade profits advantage.
4
An application under this section must be in writing and contain particulars of the transfer scheme arrangements.
5
The HMRC Commissioners may by notice require the applicant to provide further particulars in order to enable them to determine the application.
6
A requirement may be imposed under subsection (5) above within 30 days of the receipt of the application or of any further particulars required under that subsection.
7
If a notice under subsection (5) above is not complied with within 30 days or such longer period as the HMRC Commissioners may allow, they need not proceed further on the application.
8
The HMRC Commissioners must give notice of their decision on an application under this section to the applicant within 30 days of receiving the application or, if they give a notice under subsection (5) above, within 30 days of that notice being complied with.
9
If the HMRC Commissioners—
a
give notice to the applicant under subsection (8) above that they are not satisfied as mentioned in subsection (2) above, or
b
do not comply with subsection (8) above,
the applicant may require them to transmit the application to F291the tribunal.
10
A requirement under subsection (9) above must be imposed within 30 days of the giving of the notice or the failure to comply and must be accompanied by any notice given under subsection (5) above and further particulars provided pursuant to any such notice.
11
Any notice given by F291the tribunal has effect for the purposes of subsection (1) above as if it were given by the HMRC Commissioners.
12
If any particulars provided under this section do not fully and accurately disclose all facts and considerations material for the decision of the HMRC Commissioners or F291the tribunal, any resulting notice that they are satisfied as mentioned in subsection (2) above is void.
13
For the purposes of this section two companies are members of the same group of companies if they are for the purposes of F292Part 5 of CTA 2010.
Cross-heading before s. 434 inserted (with effect in accordance with Sch. 8 para. 57(1) of the amending Act) by Finance Act 1995 (c. 4), Sch. 8 para. 51(4) (with Sch. 8 para. 55(2))