Income and Corporation Taxes Act 1988

[F1440 Transfers of assets etc.U.K.

(1)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 market value at that time.

(2)Where—

[F2(a)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 market value at that time.

[F3(2A)Where under subsection (1) or (2) above there is a deemed disposal and re-acquisition of any asset representing a loan relationship of a company, [F4Chapter 2 of Part 4 of the Finance Act 1996 applies] as respects that asset as if the asset that is deemed to be disposed of and the asset that is deemed to be re-acquired were different assets.]

[F5(2B)Where under subsection (1) or (2) above there is a deemed disposal and re-acquisition of any derivative contract of a company, [F6Schedule 26 to the Finance Act 2002 applies] as respects that contract as if the contract that is deemed to be disposed of and the contract that is deemed to be re-acquired were different assets.]

(3)Where, apart from this subsection, section [F7171 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 [F8paragraphs (a) to (e)] of subsection (4) below, that section shall not apply to the disposal or acquisition.

[F9(4)The categories referred to in subsections (1) to (3) above are—

(a)assets linked solely to pension business;

(b)assets linked solely to life reinsurance business;

(c)assets of the overseas life assurance fund;

(d)assets linked solely to basic life assurance and general annuity business;

(e)assets of the [F10long-term insurance fund] not within any of the preceding paragraphs;

(f)other assets.]

(5)In this section “market value” has the same meaning as in the [F111992] Act.

[F12(6)In a case where the profits of a company’s life assurance business are charged to tax in accordance with Case I of Schedule D this section has effect with the modification specified in section 440B(3).]]

Textual Amendments

F1Ss. 440, 440A substituted for s. 440 (1.1.1990) by Finance Act 1990 (c. 29), Sch. 6 paras. 8, 11(2) (with Sch. 6 para. 12)

F2S. 440(2)(a) substituted (1.12.2001 with effect in accordance with arts. 1(2)(a), 28(2) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 28(1)

F3S. 440(2A) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 25 (with Sch. 15)

F4Words in s. 440(2A) substituted (with effect in accordance with s. 52(3) of the amending Act (which is amended (retrospectively) by FA 2005 (c. 7), Sch. 4 para. 50, Sch. 11 Pt. 2(7)) by Finance Act 2004 (c. 12), Sch. 10 para. 43

F5S. 440(2B) inserted (with effect in accordance with s. 83(3) of the amending Act) by Finance Act 2002 (c. 23), Sch. 27 para. 5 (with Sch. 28)

F6Words in s. 440(2B) substituted (with effect in accordance with s. 52(3) of the amending Act (which is amended (retrospectively) by FA 2005 (c. 7), Sch. 4 para. 50, Sch. 11 Pt. 2(7)) by Finance Act 2004 (c. 12), Sch. 10 para. 70

F7Words in s. 440(3) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290(1), Sch. 10 para. 14(22)(a) (with ss. 60, 101(1), 171, 201(3))

F8Words in s. 440(3) substituted (with effect in accordance with Sch. 8 para. 57(1) of the amending Act) by Finance Act 1995 (c. 4), Sch. 8 para. 5(2) (with Sch. 8 para. 55(2))

F9S. 440(4) substituted (with effect in accordance with Sch. 8 para. 57(1) of the amending Act) by Finance Act 1995, Sch. 8 para. 5(3), s. 55(2)

F10Words in s. 440(4)(e) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 52(1)(g)

F11Words in s. 440(5) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290(1), Sch. 10 para. 14(22)(b) (with ss. 60, 101(1), 171, 201(3))

F12S. 440(6) inserted (with effect in accordance with Sch. 8 para. 57(1) of the amending Act) by Finance Act 1995 (c. 4), Sch. 8 para. 28(3) (with Sch. 8 para. 55(2))

Modifications etc. (not altering text)

C2S. 440 modified (20.3.1997 with effect in accordance with reg. 1(2) of the modifying S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997 (S.I. 1997/473), regs. 1(1), 22 (as amended by: S.I. 2001/3629, arts. 1(2)(b), 158(1), 165(2)(d); S.I. 2004/822, regs. 1, 18)

C3S. 440 modified (12.8.2005 with effect in accordance with reg. 1(2) of the modifying S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014), regs. 1(1), 16 (as amended by S.I. 2007/2134, regs. 1(1)(2), 16)

C6S. 440(2) modified (20.3.1997 with effect in accordance with reg. 1(2) of the modifying S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997 (S.I. 1997/473), regs. 1(1), 23 (as amended by S.I. 2001/3629, arts. 1(2)(b), 158(2)); and that modifying reg. 23 is omitted (8.4.2004 with effect in accordance with reg. 1 of the revoking S.I.) by virtue of S.I. 2004/822, reg. 19

C8S. 440(4) modified (20.3.1997 with effect in accordance with reg. 1(2) of the amending Regulations) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997 (S.I. 1997/473), regs. 1(1), 24, 25; and that modifying reg. 25 is omitted (8.4.2004 with effect in accordance with regs. 1, 20(2) of the revoking S.I.) by virtue of S.I. 2004/822, reg. 20(1)