The Insurance Companies and CFCs (Avoidance of Double Charge) Regulations 2012

CFCs which are equity funds

4.—(1) The CFC rules do not apply to the insurance company by reference to its interest in the principal CFC or any associated CFC if—

(a) at least 95% of the total assets of the CFC consists of shares, and

(b) no more than 5% of the sum of the CFC’s assumed taxable total profits and exempt distribution income consists of interest or returns which are economically equivalent to interest.

(2) But this regulation does not apply if the insurance company enters into any arrangements the main purpose or one of the main purposes of which is—

(a) to secure a tax advantage for itself or any other company in relation to the operation of the CFC rules, or

(b) to avoid bringing an amount into account under Part 5 or 6 of CTA 2009 (loan relationships and relationships treated as loan relationships etc).

(3) In this regulation—

“arrangement” includes any agreement, scheme, transaction or understanding (whether or not legally enforceable);

“assumed taxable total profits” has the same meaning as in Part 9A of TIOPA 2010 (see section 371VA);

“economically equivalent to interest” has the same meaning as in section 486B(2) of CTA 2009(1);

“exempt distribution income” has the same meaning as in section 371CC(9) of TIOPA 2010;

“share” has the same meaning as in section 476(1) of CTA 2009;

“tax advantage” has the meaning given by section 1139 of CTA 2010(2).

(1)

2009 c. 4, section 486B was inserted by paragraph 3 of Schedule 24 to the Finance Act 2009 (c. 10)

(2)

2010 c. 4, section 1139 was amended by paragraph 48 of Schedule 19 to the Finance Act 2011 (c. 11) and paragraph 40 of Schedule 20 to the Finance Act 2012.