Section 41.
“3(1)Paragraphs 1 and 2 above do not apply to a policy issued by a registered friendly society in the course of tax exempt life or endowment business, but such a policy shall not be a qualifying policy unless,—
(a)in the case of a policy for the assurance of a gross sum or annuity, the conditions in subsections (2) to (4) of section 334 of this Act are fulfilled with respect to it; and
(b)in the case of a policy for the assurance of a gross sum, the conditions in sub-paragraphs (2) to (8) below are fulfilled with respect to it; and
(c)in the case of a policy issued by a new society, the contract for the insurance was made by a member of the society over the age of eighteen.
(2)Where the policy secures a capital sum which is payable only on death or only on death occurring after the attainment of a specified age not exceeding sixteen, that capital sum must not be less than 75 per cent, of the total premiums that would be payable if the death of the relevant beneficiary occurred at the age of seventy-five.
(3)Where the policy secures a capital sum which is payable only on survival for a specified term, that capital sum must be not less than 75 per cent, of the total premiums which Would be payable if the policy were to run for that term.
(4)Where the policy secures a capital sum which is payable on survival for a specified term or on earlier death, or on earlier death or disability (including a policy securing the sum on death only if occurring after the attainment of a specified age not exceeding sixteen), the capital sum payable on death, whenever that event occurs, must not be less than 75 per cent, of the total premiums which would be payable if the policy were to run for that term, except that if, at the beginning of that term, the age of the relevant beneficiary exceeds fifty-five, that capital sum may, for each year of tie excess, be less by 2 per cent, of that total than 75 per cent, thereof.
(5)For the purposes of sub-paragraphs (2) to (4) above—
(a)" the relevant beneficiary " means—
(i)if the capital sum concerned is payable on the death of the first to die of two persons, the older of them;
(ii)if that capital sum is payable on the death of the survivor of two persons, the younger of them ; and
(iii)in any other case, the person on whose death that capital sum is payable; and
(b)in determining the total premiums payable in any circumstances,—
(i)where those premiums are payable otherwise than annually, and the policy is issued by a new society, there shall be disregarded an amount equal to 10 per cent, of those premiums ;
(ii)where the policy is issued by a society other than a new society, there shall be disregarded an amount equal to £10 for each year for which account is taken of those premiums; and
(iii)so much of any premium as is charged on the ground that an exceptional risk of death is involved shall be disregarded ; and
(c)in determining the capital sum payable on any event, there shall be disregarded any provision of the policy under which, on the ground referred to in paragraph (b)(iii) above, any sum may become chargeable as a debt against that capital sum.
(6)If the policy does not secure a capital sum in the event of death occurring before the age of sixteen or some lower age, it must not provide for the payment in that event of an amount exceeding the total premiums previously paid under it.
(7)References in this paragraph to a capital sum payable on any event include references to a capital sum or series of capital sums payable by reason of that event, but where what is so payable is either an amount consisting of one sum or an amount made up of two or more sums, any reference in sub-paragraphs (2) to (4) above to 75 per cent, of the total premiums payable in any circumstances shall be compared with the smaller or smallest amount so payable ; and for the purposes of those sub-paragraphs a policy secures a capital sum payable either on death or on disability notwithstanding that the amount may vary with the event
(8)For the purposes of sub-paragraphs (2), (3), (4) and (7) above, in the case of a policy which provides for any such payments as are referred to in section 334(3) of the Taxes Act (in this sub-paragraph referred to as " interim payments"), the amount of the capital sum which is payable on any event shall be taken to be increased,—
(a)in the case of a policy which secures such a capital sum as is referred to in sub-paragraph (2) above, by the total of the interim payments that would be payable if the death of the relevant beneficiary (within the meaning of that subparagraph) occurred at the age of seventy-five ; and
(b)in the case of a policy which secures such a capital sum as is referred to in sub-paragraph (3) or sub-paragraph (4) above, by the total of the interim payments that would be payable if the policy were to run for the specified term referred to in that paragraph.
3A(1)The provisions of this paragraph have effect notwithstanding anything in paragraph 3 above.
(2)In determining whether a policy—
(a)which affords provision for sickness or other infirmity (whether bodily or mental), and
(b)which also affords assurance for a gross sum independent of sickness or other infirmity, and
(c)under which not less than sixty per cent, of the amount of the premiums is attributable to the provision referred to in paragraph (a) above,
is a qualifying policy, the conditions referred to in paragraph 3(1)(b) above shall be deemed to be fulfilled with respect to it.
(3)If there is such a variation of the terms of a policy falling within sub-paragraph (1) of paragraph 3 above that any of the conditions referred to in that sub-paragraph ceases to be fulfilled, the policy shall cease to be a qualifying policy.
(4)If a policy for any purpose falling within paragraph (1) of Schedule 1 to the [1974 c. 46.] Friendly Societies Act 1974 was issued by a new society, that policy shall cease to be a qualifying policy if the rights conferred by it are surrendered in whole or in part.”
1(1)If, with respect to a policy for the assurance of a gross sum which is issued as mentioned in section 40(5) of this Act, there is—
(a)an infringement of any of the conditions in sub-paragraphs (2) to (7) of the paragraph 3 which is set out in Part I of this Schedule (including an infringement occurring before that paragraph comes into force as part of the Taxes Act), or
(b)an infringement of the conditions in subsection (2) of section 334 of the Taxes Act,
section 332(1) of that Act shall not apply to so much as is attributable to that policy of the profits of the registered friendly society or branch concerned which arise from tax exempt life or endowment business, as defined in section 337 of that Act.
(2)With respect to policies falling within sub-paragraph (1) above, that sub-paragraph has effect in place of section 334(1) of the Taxes Act.
(3)Nothing in sub-paragraph (1) above shall be taken to affect the status of a policy as a qualifying policy within the meaning of Part I of Schedule 1 to the Taxes Act.
2In this Part of this Schedule " old society " means a friendly society which is not a new society (as defined in section 337(3) of the Taxes Act).
3(1)This Part of this Schedule applies if, on or after 19th March 1985, an old society—
(a)begins to carry on tax exempt life or endowment business; or
(b)in the opinion of the Board begins to carry on such business on an enlarged scale or of a new character.
(2)If it appears to the Board, having regard to the restrictions placed on qualifying policies issued by new societies by paragraphs 3(b)(1), 3(1)(c) and 3A(3) of Schedule 1 to the Taxes Act (as set out in Part I of tins Schedule), that for the protection of the revenue it is expedient to do so, the Board may give a direction to the old society under paragraph 4 below.
4A direction under this paragraph is that (and has the effect that) the old society to which it is given is to be treated for the purposes of the Taxes Act as a new society with respect to business carried on after the date of the direction.
5An old society to which a direction is given may, within thirty days of the date on which it is given, appeal against the direction to the Special Commissioners on the ground that—
(a)it has not begun to carry on business as mentioned in paragraph 3(1)(a) or paragraph 3(1)(b) above ; or
(b)that the direction is not necessary for the protection of the revenue.