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Finance Act 1989

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This is the original version (as it was originally enacted).

4(1)Section 541 shall be amended as follows.

(2)After subsection (4) there shall be inserted—

(4A)Where, immediately before the happening of the chargeable event, the rights conferred by a qualifying endowment policy are held as security for a debt owed by a company, then, if—

(a)the conditions in subsection (4B) below are satisfied,

(b)the amount of the debt exceeds the total amount previously paid under the policy by way of premiums, and

(c)the company makes a claim for the purpose within two years after the end of the accounting period in which the chargeable event happens,

this section shall have effect as if the references in subsection (1)(a) and (b) to that total amount were references to the amount of the debt.

(4B)The conditions referred to in subsection (4A) above are—

(a)that, throughout the period beginning with the making of the insurance and ending immediately before the happening of the chargeable event, the rights conferred by the policy have been held as security for a debt owed by the company;

(b)that the capital sum payable under the policy in the event of death during the term of the policy is not less than the amount of the debt when the insurance was made;

(c)that any sum payable under the policy by reason of the chargeable event is applied in repayment of the debt (except to the extent that its amount exceeds the amount of the debt);

(d)that the debt was incurred to defray money applied—

(i)in purchasing an estate or interest in land to be occupied by the company for the purposes of a trade carried on by it, or

(ii)for the purpose of the construction, extension or improvement (but not the repair or maintenance) of buildings which are or are to be so occupied.

(4C)If the amount of the debt is higher immediately before the happening of the chargeable event than it was at some earlier time during the period mentioned in subsection (4B)(a) above, the amount to be taken into account for the purposes of subsection (1) above shall be the lowest amount at which it stood during that period.

(4D)If during the period mentioned in subsection (4B)(a) above the company incurs a debt by borrowing in order to repay another debt, subsections (4B) and (4C) above shall have effect as if, where appropriate, references to either debt included references to the other.

(3)In subsection (5), after paragraph (b) there shall be inserted and

(c)“qualifying endowment policy” means a policy which is a qualifying policy by virtue of paragraph 2 of Schedule 15;.

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