The Insurance Companies (Taxation of Reinsurance Business) (Amendment No. 2) Regulations 2003

New regulation 11A

11.  After regulation 11 insert—

“Election for certain business to be excluded from section 431C

11A.— (1) A company may make an election under this regulation in relation to—

(a) any period of account beginning on or after 1st November 2003; and

(b) any of its reinsurance business which is business of the kind specified in paragraph (2), (3) or (4) below.

(2) The business specified in this paragraph is business—

(a) which is of any of the descriptions specified in section 431D(1)(b) of the Taxes Act(1), being business for which the policy or contract concerned was made on or after 1st November 1994; and

(b) the contract for which was made before the beginning of the company’s first period of account to begin on or after 1st November 2003.

(3) The business specified by this paragraph is business the contract for which—

(a) was effected by a company resident in the United Kingdom at or through a branch or agency outside the United Kingdom where none, or no significant part, of the reinsurance business carried on relates to life assurance business with policy holders or annuitants residing in the United Kingdom; and

(b) was made before 1st November 1994.

(4) The business specified by this paragraph is business the contract for which was made after the beginning of the company’s first period of account to begin on or after 1st November 2003 and replaces—

(a) a contract made before the beginning of the company’s first period of account to begin on or after 1st November 2003 such as is mentioned in paragraph (2) above;

(b) a contract made before 1st November 1994 such as is mentioned in paragraph (3) above; or

(c) a contract that replaced a contract such as is mentioned in sub-paragraph (a) or (b).

(5) For the purposes of paragraph (4) above, a contract replaces a contract if it results in—

(a) no significant difference in the type of business being reinsured; and

(b) no significant variation in the terms on which that business is reinsured.

(6) For the purposes of paragraph (5) above, where more than one contract replaces a contract—

(a) there is no significant difference in the type of business being reinsured if the replacement contracts, when taken together, do not result in such a difference; and

(b) there is no significant variation in the terms on which business is reinsured if the replacement contracts, when taken together, do not result in such a variation.

(7) Where there is a relevant transfer from one person (“the transferor”) to another (“the transferee”) and the transferor makes an election under this regulation in relation to that business, the transferee is to be treated for the purposes of these Regulations as making the election.

(8) In paragraph (7) above, “a relevant transfer” means a transfer of reinsurance business that is effected by—

(a) novation; or

(b) an insurance business transfer scheme.

(9) A company may revoke an election under this regulation with effect for any period of account in relation to which it would have effect.

(10) A revocation under paragraph (9) above must be in respect of all elections under this regulation which a company has made or is treated as having made.”.

(1)

The reference is to section 431D of the Income and Corporation Taxes Act 1988 which was inserted by paragraph 2 of Schedule 8 to the Finance Act 1995 and amended by section 108 of the Finance Act 2000 (c. 17).