The Insurance Companies (Taxation of Reinsurance Business) (Amendment) Regulations 2007
Citation, commencement and effect1.
(1)
These Regulations may be cited as the Insurance Companies (Taxation of Reinsurance Business) (Amendment) Regulations 2007 and shall come into force on 13th August 2007.
(2)
Regulations 3 and 5 to 8 have effect in relation to periods of account beginning on or after 1st January 2007 and ending on or after the date on which these Regulations come into force.
(3)
Regulation 4 has effect in relation to periods of account ending on or after 31st January 2005.
Amendments to the Insurance Companies (Taxation of Reinsurance Business) Regulations 19952.
Amendment of regulation 23.
In regulation 2 (interpretation)—
(a)
““EEA Agreement” and “EEA State” have the meanings given in Schedule 1 to the Interpretation Act 19785;”,
(b)
““internal linked fund” has the meaning given by section 431(2) of the Taxes Act;”, and
(c)
in the definition of “section 439A”, for “439A” (in both places) substitute “431G”.
Amendment of regulations 4 and 54.
In each of the following places, for “12(4)” substitute “9(3)”—
(a)
regulation 4 (calculation of investment return in first accounting period), in the definition of C, and
(b)
regulation 5(1) (calculation of investment return in second and subsequent accounting periods other than final accounting period), in the definition of Cn.
Amendment of regulation 7A5.
“(5)
Where section 442A of the Taxes Act applies to the life or endowment business carried on by friendly societies subject to the modification prescribed by regulation 19 of the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 20057, this regulation shall have effect as if the reference in paragraph (2)(a)(ii) above to basic life assurance and general annuity business were a reference to taxable basic life assurance and general annuity business (within the meaning given by section 431(2) of the Taxes Act as modified by regulation 6 of those regulations).”
Amendment of regulation 116.
Amendment of regulation 11A7.
(1)
(2)
In paragraph (2)(a) after “the Taxes Act” insert “(as it has effect before the substitution made by paragraph 9(2) of Schedule 7 to the Finance Act 2007)”.
(3)
“(11)
An election made by a company under this regulation ceases to have effect at the end of the accounting period immediately preceding the first accounting period of the company which begins on or after 1st January 2007.”
Amendment of regulation 128.
(1)
In regulation 12 (exclusion of certain insurance business from section 439A), for “section 439A” substitute “subsection (3) of section 431G”.
(2)
The heading accordingly becomes “Exclusion of certain reinsurance business from subsection (3) of section 431G”.
These Regulations amend the Insurance Companies (Taxation of Reinsurance Business) Regulations 1995 (SI 1995/1730) (“the principal Regulations”). The principal Regulations make provision for the purposes of section 442A of the Income and Corporation Taxes Act 1988 (“the Taxes Act”: c. 1) in relation to the calculation of the investment return on an insurance policy or annuity contract which is the subject of a reinsurance arrangement.
Regulation 1 provides for citation, commencement and effect. Authority for the retrospective effect of certain of the amendments is given by paragraph 58 of Schedule 8 to the Finance Act 1995 (c. 4).
Regulation 2 introduces the amendments to the principal Regulations. The amendments take account of changes made by the Finance Act 2007 (“FA 2007”: c. xx) and update the principal Regulations in other respects.
Regulation 3 amends regulation 2 (interpretation) so as to take into account amendments made to the Interpretation Act 1978 (c.30) by the Legislative and Regulatory Reform Act 2006 (c. 51) as well as amendments made to the Taxes Act by FA 2007.
Regulation 4 amends regulations 4 (calculation of investment return in first accounting period) and 5 (calculation of investment return in second and subsequent accounting periods other than final accounting period) so as to take account of changes to rules made by the Financial Services Authority.
Regulation 5 amends regulation 7A (treatment of amounts of investment return which are less than zero) so as to take into account the modification of section 442A of the Taxes Act by the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014).
These Regulations, together with the relevant legislation in FA 2007 (c. 11), are part of the outcome of a continuing consultation process. A draft regulatory impact assessment was included as part of a consultation document, “Life Assurance Company Taxation – A Technical Consultative Document”, which was published by Her Majesty’s Revenue and Customs in May 2006. This is available at www.hmrc.gov.uk/consultations.