HC Deb 01 July 2003 vol 408 cc268-72

Amendments made: No. 121, in page 378, line 29, leave out sub-paragraph (6) and insert— '(6) After subsection (6A) insert— (6B) A contract which reinsures risk in respect of insurances to be made only after the making of the contract of reinsurance can constitute a transfer of business by virtue of subsection (6)(c) above only if a potential advantage is conferred on the reinsurer by the contract. (6C) And for the purposes of subsection (6B) above a potential advantage is conferred on the reinsurer by the contract if, taking the contract as "the actual provision" for the purposes of Schedule 28AA to the Taxes Act 1988, the effect of making the actual provision instead of the arm's length provision (within the meaning of that Schedule) would have in relation to the reinsurer the effect specified in paragraph 5(1)(b) of that Schedule.".'.

No. 122, in page 381, line 11, at end insert—

'(15) The references in subsections (8), (12) and (13) above to an amount being brought into account—

  1. (a) in a case where the amount taken into account as a receipt of the company under section 83(2) above in relation to the contingent loan or loans in question is an amount brought into account in an account concerned wholly with non-participating business, are to its being brought into account in that account or in any other account concerned wholly with nonparticipating business, and
  2. (b) in a case where the amount so taken into account is an amount brought into account in an account concerned wholly or partly with participating business, are to its being brought into account in that account or in any other account concerned wholly or partly with participating business.
(16) Where—
  1. (a) a transfer to another fund brought into account for a period of account as other expenditure in any account concerned wholly with non-participating business is brought into account as other income in an account concerned wholly or partly with participating business, or
  2. (b) a transfer to another fund brought into account for a period of account as other expenditure in any account concerned wholly or partly with participating business is brought into account as other income in an account concerned wholly with non-participating business,
subsection (8) above has effect as if it were a positive amount brought into account as transfers to non-technical account for that period of account in the account in which it is brought into account as other expenditure.

(17) For the purposes of subsections (15) and (16) above—

  1. (a) an account is concerned wholly with non-participating business if it relates exclusively to policies or contracts under which the policy holders or annuitants are not eligible to participate in surplus, and
  2. (b) an account is concerned wholly or partly with participating business if it relates wholly or partly to other policies or contracts.".'.

No. 123, in page 381, line 48, at end insert— `(3B) In subsection (3A)(a) above (and section 89(1B) below) "chargeable gains referable to the company's basic life assurance and general annuity business", in relation to an accounting period, means the chargeable gains so far as referable to that business accruing to the company in the accounting period after deducting—

  1. (a) any allowable losses so referable accruing to the company in the accounting period, and
  2. (b) so far as they have not been allowed as a deduction from chargeable gains in any previous accounting period, any allowable losses so referable previously accruing to the company.".'.

No. 124, in page 384, line 4, at end insert— '8A (1) In section 432D of the Taxes Act 1988 (section 432B apportionment: value of non-participating funds), after "value of assets" (in each place) insert "or as other income". (2) Sub-paragraph (1) has effect for periods of account beginning on or after 1st January 2003.'.

No. 125, in page 385, leave out lines 8 to 11 and insert The policy holders' share of the franked investment income from investments held in connection with a company's" substitute "So much of the policy holders' share of the franked investment income from investments of a company's long-term insurance fund as is referable to its". (3) In section 441(1) and (2) of the Taxes Act 1988 (overseas life assurance business), omit "and section 441A".'.

No. 126, in page 389, line 7, leave out from 'where' to 'acquires' in line 9 and insert ',within a period of 10 days, an insurance company disposes of a number of section 440A securities and (whether subsequently or previously)'.

No. 127, in page 389, line 34, leave out from 'securities' to 'or' in line 36 and insert 'which are section 212 assets within the meaning of section 214(1) (rights under authorised unit trusts and interests in offshore funds),'.

No. 128, in page 390, line 24, at end insert— '14A (1) Section 213 of the Taxation of Chargeable Gains Act 1992 (c.12) (spreading of gains and losses under section 212) is amended as follows.

(2) In subsection (3)—

  1. (a) for "subsection (3A)" substitute "subsection (8H)",
  2. (b) in paragraph (b) for "one of the next 6" substitute "either of the next 2" and for "subsection" substitute "section",
  3. (c) in paragraph (c), for "any intervening accounting period" substitute "the intervening accounting period (if there is one)", and
  4. (d) in paragraph (ca), for "none of the intervening accounting periods is" substitute "the intervening accounting period (if there is one) is not".

(3) Omit subsections (3A) and (3B).

(4) For subsection (5) substitute— (4A) The following provisions apply where an insurance business transfer scheme has effect to transfer business which consists of the effecting or carrying out of contracts of long-term insurance from one person ("the transferor") to another ("the transferee"). (5) Subject to subsections (5A) to (7) below, any chargeable gain or allowable loss which (assuming that the transferor had continued to carry on the business transferred) would have accrued to the transferor by virtue of subsection (1) above after the transfer shall instead be deemed to accrue to the transferee. (5) After subsection (8) insert— (8A) Subsection (8B) below applies where—

  1. (a) immediately before the transfer the transferee did not carry on business consisting of the effecting or carrying out of contracts of long-term insurance,
  2. (b) the transferor and the transferee are, at the time of the transfer, members of the same group,
  3. (c) the net amount for the accounting period of the transferor ending with the day of the transfer, or for the immediately preceding accounting period of the transferor, ("the relevant pre-transfer period of the transferor") represents an excess of gains over losses,
  4. (d) the net amount for the accounting period of the transferee in which the transfer takes place, or for the immediately following accounting period of the transferee, ("the relevant post-transfer period of the transferee") represents an excess of losses over gains (after taking account of any reductions made by virtue of this section), and
  1. (e) within 2 years after the end of the relevant post-transfer period of the transferee, the transferor and the transferee make a joint election in respect of the whole or part of the net amount for that period by notice to an officer of the Board.
(8B) Subject to subsections (8C) to (8E) and (8H) below, the net amounts for both the relevant pre-transfer period of the transferor and the relevant post-transfer period of the transferee shall be reduced by the amount in respect of which the election is made. (8C) Subsection (8B) above does not apply if—
  1. (a) the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and
  2. (b) the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer.
 (8D) If—
  1. (a) the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and
  2. (b) the relevant pre-transfer period of the transferor is the accounting period ending with the day of the transfer,
 subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferee in which the transfer takes place. (8E) If—
  1. (a) the relevant post-transfer period of the transferee is the accounting period in which the transfer takes place, and
  2. (b) the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer,
 subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferor ending with the day of the transfer.

(8F) The conditions referred to in subsections (8D) and (8E) above are that—

  1. (a) there is (after taking account of any reductions made by virtue of this section) no net amount for the accounting period, and
  2. (b) the company whose accounting period it is did not join a group of companies in the accounting period.

(8G) A copy of the notice containing an election under subsection (8A)(e) above must accompany the tax return for the relevant post-transfer period of the transferee; and paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.

(8H) Subsections (3) and (8A) and (8B) above have effect where the company, or the transferee, in question joins a group of companies in the accounting period for which the net amount represents an excess of losses over gains as if a claim or election could not be made in respect of that net amount except to the extent (if any) that the net amount is an amount which, assuming there to be gains accruing to the company or transferee immediately after the beginning of that period, would fall to be treated under paragraph 4 of Schedule 7AA as a qualifying loss in relation to those gains.

(8I) References in this section to a company joining a group of companies are to be construed in accordance with paragraph 1 of Schedule 7AA as if those references were contained in that Schedule; and in subsection (8A)(b) above "group" has the same meaning as in that Schedule."

(6) This paragraph has effect where the accounting period for which the net amount represents an excess of losses over gains is an accounting period beginning on or after 1st January 2003.'.

No. 129, in page 391, line 3, leave out from `transferor")' to 'is' in line 6 and insert—

'(2) Where the last period covered by a periodical return of the transferor ends otherwise than immediately before the transfer, there'.

No. 130, in page 391, line 11, leave out 'takes place'.

No. 131, in page 391, leave out lines 15 to 17 and insert—

'(2A) Where the last period covered by a periodical return of the transferor (whether or not by virtue of subsection (2) above) ends immediately before the transfer, there is to be deemed for the relevant purpose to be a periodical return of the transferor—

  1. (a) covering the time of the transfer, and
  2. (b) containing such entries as would have been included in an actual periodical return covering the time of the transfer,
(and so making the time of the transfer a period of account of the transferor for the relevant purpose).

(2B) Where the last period covered by a periodical return of the transferor ends after the transfer, the periodical return covering that period is to be ignored for all purposes of corporation tax other than the relevant purpose.

(3) In this section "the relevant purpose" means'.

No. 132, in page 396, line 7, at end insert—

`(2ZCA) For the purposes of subsection (2ZC) above—

  1. (a) closing liabilities of the transferee are to be taken not to relate to the business transferred to the extent that they are liabilities which, immediately before the transfer, were reinsured by the transferor with the transferee, but
  2. (b) closing liabilities of the transferee are to be taken to relate to the business transferred to the extent that they are liabilities which, immediately before the transfer, were reinsured by the transferee with the transferor if the business transferred consists of or includes that reinsurance business.'.

No. 133, in page 397, line 10 [Schedule 33], after `431(2)', insert `of the Taxes Act 1988'.

No. 134, in page 397, line 32, at end insert—

'Meaning of "period of account"

'26A In section 431(2) of the Taxes Act 1988 (interpretative provisions relating to insurance companies), after the definition of "periodical return" insert—

""period of account" means the period covered by a periodical return;".'.

—Dawn Primarolo.]

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