§ Mr. BurnsTo ask the Chancellor of the Exchequer if any amendments are proposed to the Taxation of Chargeable Gains Act 1992.
§ Mr. DorrellThe Income and Corporation Taxes Act 1970 contains a provision under which, if certain conditions are satisfied, assets transferred from one company to another as part of a company reconstruction or amalgamation are deemed to have been disposed of for an amount that gives rise to neither a gain nor a loss. This provision enables the rationalisation and reorganisation of businesses to take place without the immediate tax charge that would ordinarily arise when assets are transferred from one company to another.
When the original legislation was consolidated in the Taxation of Chargeable Gains Act 1992, there was an error in a cross-reference involving the measures relating to transfers of life assurance business. If not corrected, this would exclude a transfer of insurance business to or from the United Kingdom branch of an overseas life assurance company from the relief conferred by the original legislation.
No transfers of insurance business have been affected by the legislation in the consolidated act so far, and the Chancellor proposes to introduce legislation in next year's Finance Bill to correct the error in the Taxation of Chargeable Gains Act 1992. The legislation will apply to transfers of insurance business which take place after today.