Finance Act 1994

Section 169.

SCHEDULE 18U.K. Interest rate and currency contracts: insurance and mutual trading companies

[F1 Application of insurance companies provisions relating to loan relationships]U.K.

F21(1)Part I of Schedule 11 to the Finance Act 1996 (special provision with respect to loan relationships for insurance companies) shall have effect (subject to sub-paragraph (2) below) in relation to qualifying contracts as it has effect in relation to loan relationships which are creditor relationships within the meaning of Chapter II of Part IV of that Act.

(2)That Part of that Schedule shall have effect in its application in relation to qualifying contracts, as if—

(a)references to section 82(2) of the Finance Act 1996 were references to section 159 of this Act, and

(b)references to credits and debits given by Chapter II of Part IV of that Act in respect of a loan relationship were references, respectively, to the profits and losses deriving from the contract.

F31A(1)Where the I minus E basis is applied for any accounting period in respect of the life assurance business or capital redemption business of any insurance company, this Chapter shall have effect for that period in relation to contracts and options held for the purposes of that business as if the words in subsection (10) of section 150A from “but references” onwards were omitted.

(2)Expressions used in sub-paragraph (1) above and in Part I of Schedule 11 to the Finance Act 1996 have the same meanings in this paragraph as in that Part of that Schedule.

Life assurance business: Case I of Schedule DU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-life mutual businessU.K.

3(1)Subject to sub-paragraph (2) below, sub-paragraph (3) below applies where a qualifying contract was at any time in an accounting period of a mutual trading company held by the company for the purposes of any non-life mutual business carried on by it.

(2)Where the qualifying contract was held partly for the purposes of the non-life mutual business and partly for other purposes—

(a)the profit or loss on the contract for the period shall be apportioned on a just and reasonable basis, and

(b)any reference in sub-paragraph (3) below to that profit or loss shall be construed as a reference to so much of it as is referable to the non-life mutual business.

(3)Notwithstanding anything in section 159 of this Act—

(a)no part of the profit or loss on the contract for the period shall be treated for the purposes of the Tax Acts as a profit or loss of a trade or part of a trade, and

(b)accordingly, the whole of that profit or loss shall be treated for the purposes of section 160 of this Act as a non-trading profit or loss.

InterpretationU.K.

4In this Schedule—

• F4. . .

• F5. . .

• “non-life mutual business” means any mutual trading, or any mutual insurance or other mutual business, which (in either case) is not life assurance business.