SCHEDULES
C4C6C7SCHEDULE 11 Loan relationships: special provisions for insurers
Sch. 11 modified (with effect in accordance with reg. 1(2) of the amending S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014), regs. 1(1), 40 (as amended (with effect in accordance with reg. 1(2) of the amending S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) (Amendment) Regulations 2007 (S.I. 2007/2134), regs. 1(1), 31)
Sch. 11 modified (with effect in accordance with reg. 1(2) of the amending S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014), regs. 1(1), 41 (as amended (with effect in accordance with reg. 1(2) of the amending S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) (Amendment) Regulations 2007 (S.I. 2007/2134), regs. 1(1), 32(a))
C3 Part I Insurance companies
Sch. 11 Pt. I applied (with modifications) (29.4.1996) by 1994 c. 9, s.169, Sch. 18 para. 1 (as substituted (29.4.1996) by 1996 c. 8, s.104, Sch. 14 para. 79 (with saving in Pt. IV Ch. II))
Sch. 11 Pt. I applied (with modifications) (24.7.2002 with effect as mentioned in s. 83(3)(4) of the amending Act) by Finance Act 2002 (c. 23), s. 83(1), Sch. 26 Pt. 8 para. 42
I minus E basis
1
F291
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F301A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F301B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F301C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F292
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rules for different categories of business
2
F35C11
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F312
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F362A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F32C13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F324
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F325
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Apportionments
F393
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C5F13A
1
This paragraph applies where—
a
2
If any debits relate to interest payable in respect of the late payment of any benefits, they are referable to the category of F5long-term business which comprises the effecting and carrying out of the policies or contracts under which the benefits are payable.
F372A
If any debits or credits relate to liabilities arising from deposit back arrangements, they are (subject to sub-paragraph (2B)) referable to the category of long-term business which comprises the business reinsured by the arrangements under which the deposit back arrangements are made.
2B
If the business reinsured is not all of the same category of long-term business, the debits and credits for any period of account are referable to the categories of business in the same proportions as the mean of the proportions at the beginning and end of the period of account of the liabilities reinsured by the arrangements which are liabilities of the categories of business.
3
If the liability is a liability of an internal linked fund of the company, any debits or credits are referable—
a
to the category of F5long-term business to which the fund relates; or
b
where the fund relates to two or more categories of such business, to those categories in the same proportion as the linked assets in the fund are apportioned to them under section 432ZA(4) of the Taxes Act 1988 (linked assets).
4
5
For the purpose of determining that fraction, F17subsections (6), (6A)F26, (6B) and (8) of section 432A of the Taxes Act 1988 (apportionment of income and gains) shall have effect as if—
a
the debits or credits were income not directly referable to any category of business;
b
F18the references in subsections (6)(a) and (6A)(a) to assets directly referable to a category of business were a reference to assets linked to that category of business; and
F27c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F286
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treatment of deficit
4
C21
Where, in the case of any insurance company, a non-trading deficit on its loan relationships is produced for any accounting period (“the deficit period”) by any separate computation made under paragraph 2 above for—
a
basic life assurance and general annuity business, F21...
F21b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the following provisions of this paragraph shall apply in relation to that deficit, instead of section 83 of, and Schedule 8 to, this Act.
2
On a claim made by the company in relation to the whole or any part of the deficit—
C2a
b
the amount of the F12... income and gains against which it is set off shall be treated as reduced accordingly;
and any such reductions shall be made before F13any expenses deduction under section 76 of the Taxes Act 1988 .
3
Subject to the following provisions of this paragraph, on a claim made by the company in relation to the whole or any part of so much (if any) of the deficit as exceeds the amount of the F14... income and gains for the deficit period that are referred to in sub-paragraph (2)(a) above, the amount to which the claim relates shall be—
F6a
carried back to accounting periods falling wholly or partly within the period of twelve months immediately preceding the deficit period; and
b
in accordance with sub-paragraph (5) below, set against the eligible profits of the company for F7up to three such periods.
4
If the whole or any amount of the deficit is not set off under sub-paragraph (2) or (3) above, so much of it as is not set off shall be—
a
carried forward to the accounting period immediately following the deficit period; and
b
treated for the purposes of the Corporation Tax Acts (including the following provisions of this paragraph) as F15expenses payable which are referable to the period following the deficit period and are to be brought into account at Step 3 in section 76(7) of the Taxes Act 1988 .
5
Subject to sub-paragraph (6) below, where, in pursuance of a claim under sub-paragraph (3) above, any amount falls to be carried back to be set off against the eligible profits of the company for F8accounting periods falling wholly or partly within the period of twelve months mentioned in sub-paragraph (3)(a) above, that amount shall be set off against those profits as follows, that is to say—
a
the amount shall be applied, up to the limit for the first set-off period, in reducing the company’s eligible profit for that period;
b
any remainder of that amount after the limit for the first set-off period is reached shall be applied, up to the limit for the second set-off period, in reducing the company’s eligible profit for the second set-off period; and
c
any remainder of that amount after the limit for the second set-off period has been reached shall be applied, up to the limit for the third set-off period, in reducing the company’s eligible profit for the third set-off period.
F226
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
C27
For the purposes of this paragraph the eligible profit of the company for an accounting period is the amount (if any) which, in pursuance of any separate computation made for that period for F23its basic life assurance and general annuity business, is chargeable to tax for that period under Case III of Schedule D as profits and gains arising from the company’s loan relationships.
8
For the purposes of this paragraph—
a
the first set-off period is the accounting period immediately preceding the deficit period,
b
the second set-off period is the accounting period F9(if any) which falls wholly or partly within the period of twelve months mentioned in sub-paragraph (3)(a) above and immediately precedes the first set-off period,
c
the third set-off period is the accounting period F9(if any) which falls wholly or partly within the period of twelve months mentioned in sub-paragraph (3)(a) above and immediately precedes the second set-off period, and
d
the limit for a set-off period is the amount equal to the adjusted amount of the company’s eligible profit for that period.
9
In sub-paragraph (8) above, the reference to the adjusted amount of a company’s eligible profit for a set-off period is F10(subject to sub-paragraph (9A) below) a reference to so much (if any) of the company’s eligible profit for that period as remains after reducing it by an amount equal to the unused part of the relevant deductions for that period.
F119A
Where a set-off period falls only partly within the period of twelve months mentioned in sub-paragraph (3)(a) above, the adjusted amount of a company’s eligible profit for that period shall be taken to be confined to the part of the amount computed under sub-paragraph (9) above which is proportionate to the part of the set-off period that falls within that period of twelve months.
C210
For the purposes of sub-paragraph (9) above the unused part of the relevant deductions for any set-off period is the amount (if any) by which the aggregate of—
a
so much of the amount of any deductions for the set-off period by virtue of section 76 of the Taxes Act 1988 as is referable to F24basic life assurance and general annuity business, and
b
so much of the aggregate of the deductions made in the case of the company in respect of charges on income for that period as is so referable,
exceeds the aggregate of the amounts referable to F24basic life assurance and general annuity business that could for that period be applied in making deductions by virtue of that section, or in respect of charges on income, if the eligible profit of the company for that period were disregarded.
11
In sub-paragraph (10) above, the references, in relation to a claim under sub-paragraph (3) above (“the relevant claim”), to deductions by virtue of section 76 of the Taxes Act 1988 for a set-off period are references to F16the expenses deduction that would have fallen to be made by virtue of that section for that period if—
a
no account were taken of either—
i
the relevant claim; or
ii
any claim under sub-paragraph (3) above relating to a deficit for an accounting period after the deficit period;
but
b
there were made all such adjustments required by virtue of any sum having been carried back to that set-off period—
i
under the Corporation Tax Acts, but
ii
otherwise than in pursuance of the relevant claim or of any other such claim as is mentioned in paragraph (a) above.
F2512
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2513
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2514
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
A claim for the purposes of sub-paragraph (2) or (3) above must be made within the period of two years immediately following the end of the deficit period or within such further period as the Board may allow.
F19C216
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Election for accruals basis for long term business assets
F335
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interpretation of Part I
F346
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II Corporate members of Lloyd’s
7
1
This Chapter does not apply as respects any loan relationship of a corporate member of Lloyd’s in so far as rights or liabilities making up that relationship, or any securities representing them, are—
a
assets forming part of that member’s premiums trust fund; or
b
liabilities attached to that fund.
2
Section 230 of the M1Finance Act 1994 (interpretation of provisions applying to corporate members of Lloyd’s) shall apply for the purposes of this paragraph as it applies for the purposes of Chapter V of Part IV of that Act.
Sch. 11 modified (retrospective to 1.1.1995) by S.I. 1997/473, reg. 53
Sch. 11 modified (13.10.1999) by S.I. 1997/473, reg. 53ZA (as inserted (13.10.1999) by S.I. 1999/2636, reg. 6)