The Insurance Companies (Corporation Tax Acts) (Amendment) Order 2007

Amendment of the Finance Act 1989

13.  After section 82D insert—

“Section 82D: treatment of transferors under insurance business transfer schemes

82E.—(1) This section applies where an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”).

(2) Where the last period of account of the transferor ending before the transfer ends otherwise than immediately before the transfer, there is to be deemed for the purposes of this section and section 82D above to be—

(a)a period of account of the transferor beginning immediately after the last period of account ending before the transfer and ending immediately before the transfer;

(b)a period of account of the transferor beginning immediately after the transfer.

(3) In applying section 82D above and this section, where subsection (2) above applies, no account shall be taken of a period of account of the transferor which includes the time of the transfer.

(4) Where the transfer is of the whole, or substantially the whole, of the long-term business of the transferor, the transferor may make an election under this subsection.

(5) An election under subsection (4) above—

(a)is irrevocable; and

(b)is to be made by notice to an officer of Revenue and Customs no later than the end of the period of 28 days beginning with the day following that on which the transfer takes place.

(6) Where the transferor makes an election under subsection (4) above then in computing profits for the purposes of the Taxes Act 1988 in accordance with the provisions applicable to Case I of Schedule D—

(a)the aggregate of all the amounts that would have been brought into account under section 82D(2)(b) above for periods of account of the transferor subsequent to the transfer if the transfer had not taken place shall be brought into account as a trading receipt of the transferor for the period of account ending immediately before the transfer; and

(b)section 82D(2)(b) above shall have no effect in relation to subsequent periods of account of the transferor.

(7) Where the transferor does not make an election under subsection (4) above then for any period of account of the transferor ending on or after the transfer—

(a)in the case of a transfer of the whole of the long-term business, no amount shall be brought into account under section 82D(2)(b) above;

(b)in the case of a transfer of part of the long-term business, the amount to be so brought into account shall be reduced by the appropriate amount mentioned in section 82F(4) below.

Section 82D: treatment of transferees under insurance business transfer schemes

82F.—(1) This section applies where—

(a)an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”); and

(b)the transferor does not make an election under section 82E(4) above.

(2) For the purposes of this section and section 82D above, where the first period of account of the transferee ending after the transfer began before the transfer, it shall be treated as beginning immediately after the transfer.

(3) Section 82D above shall apply as if—

(a)the reference in subsection (2)(b) of that section to subsequent periods of account included a reference to periods of account of the transferee ending on or after the transfer; and

(b)the reference in that subsection to the company included a reference to the transferee.

(4) The amount to be brought into account as a trading receipt of a transferee (or, if there is more than one transferee, all the transferees) for a period of account by virtue of this section shall not exceed the appropriate amount.

(5) Where there is more than one transferee, the amount to be brought into account as a trading receipt of each transferee for a period of account by virtue of this section shall be the relevant fraction of the appropriate amount.

(6) The appropriate amount is the amount which bears to XA for the period of account in question “the relevant proportion”.

Here—

XA has the meaning given by section 82D(2C) above; and

“the relevant proportion”, in relation to a transferee, is the proportion that the liabilities of the transferor to policy holders and annuitants transferred to the transferee bear to such liabilities of the transferor immediately before the transfer.

(7) The relevant fraction, in relation to a transferee, is the fraction of which—

(a)the numerator is the liabilities of the transferor to policy holders and annuitants transferred to the transferee; and

(b)the denominator is the liabilities of the transferor to policy holders and annuitants transferred to all the transferees.”.