Income and Corporation Taxes Act 1988

Schedule 19AB

Entitlement to certain payments on account 1 (1) An insurance company carrying on pension business shall for each provisional repayment period in an accounting period be entitled on a claim made in that behalf to a payment (in this Schedule referred to as a “provisional repayment”) of an amount equal , subject to paragraph 2 below, to the aggregate of— (a) the appropriate portion of any income tax borne by deduction on any payment received by the company in that provisional repayment period and referable to its pension business, and (b) the appropriate portion of any tax credit in respect of a distribution received by the company in that provisional repayment period and referable to its pension business, or of such lesser amount as may be specified in the claim. (2) For the purposes of this paragraph, a “provisional repayment period” of a company— (a) shall begin whenever— (i) the company begins to carry on pension business; (ii) an accounting period of the company begins, at a time when the company is carrying on such business; or (iii) a provisional repayment period of the company ends, at a time when the company is carrying on such business; and (b) shall end on the first occurrence of either of the following— (i) the expiration of three months from the beginning of the provisional repayment period; or (ii) the end of an accounting period of the company. (3) In the application of subsections (5) to (9) of section 432A for the purpose of determining the amounts to which a company is entitled by way of provisional repayments in the case of any accounting period of the company, the reference in subsection (5) to “the relevant fraction” shall be taken as a reference to the provisional fraction for that accounting period. (4) For the purposes of this paragraph— (a) the provisional fraction for an accounting period of a company is the fraction which would, on the basis of the company’s latest company tax return, be the relevant fraction for the purposes of section 432A(5) for the accounting period to which that return relates; but (b) if there is no company tax return on the basis of which that fraction can be ascertained, the provisional fraction shall be taken to be nil; but this sub-paragraph is subject to paragraph 2 below. (5) In sub-paragraph (1) above “the appropriate portion” means— (a) in the case of an insurance company carrying on pension business and no other category of long-term business, the whole; and (b) in the case of an insurance company carrying on more than one category of long-term business— (i) where the payment or distribution in question is income arising from an asset linked to pension business, the whole; . . . (ii) if and to the extent that the payment or distribution in question is income which is not referable to a category of business by virtue of subsection (3) or (4) of section 432A, the provisional fraction; and (iii) except as provided by sub-paragraph (i) or (ii) above, none. (6) Paragraphs 57 to 60 of Schedule 18 to the Finance Act 1998 (general provisions as to procedure on claims and elections) do not apply to a claim for a provisional repayment. (6A) A claim for a provisional repayment shall be in such form as the Board may determine and the form of claim shall provide for a declaration to the effect that all the particulars given in the form are correctly stated to the best of the knowledge and belief of the person making the claim. (7) A provisional repayment for a provisional repayment period shall be regarded as a payment on account of the amounts (if any) which the company would, apart from this Schedule, be entitled to be . . . repaid in respect of its pension business for the accounting period in which that provisional repayment period falls, in respect of— (a) income tax borne by deduction on payments received by the company in that accounting period and referable to its pension business, . . . (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . on a claim such as is mentioned in paragraph 9(2) of Schedule 18 to the Finance Act 1998. . . in respect of that accounting period. (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) In this paragraph— “latest company tax return”, in the case of an accounting period of a company (“the current accounting period”), means, subject to sub-paragraph (11) below, the company tax return for the latest preceding accounting period of the company for which such a return has been delivered before the making of the first claim for a provisional repayment for the current accounting period; and “self-assessment” means an assessment included in a company tax return, and includes a reference to such an assessment as amended. (11) In any case where— (a) there is a company tax return which would, apart from this sub-paragraph, be the latest such return in the case of an accounting period of a company, (b) the self-assessment required to be included in that return has been amended, and (c) that amendment was made before the making of the first claim for a provisional repayment for the accounting period mentioned in paragraph (a) above, the return which is to be regarded as the latest company tax return in the case of that accounting period shall be that return as it stands amended immediately after the making of that amendment of the self-assessment (or, if the self-assessment has been so amended more than once, that return as it stands amended immediately after the making of the last such amendment) but ignoring amendments which do not give rise to any change in the fraction which, on the basis of the return as it has effect from time to time, would be the relevant fraction for the purposes of section 432A(5) for the accounting period to which the return relates. Changes in the provisional fraction 2 (1) This paragraph applies in any case where— (a) a claim has been made for a provisional repayment for at least one provisional repayment period in an accounting period of a company; (b) subsequently, a further such claim is made for a provisional repayment period falling within that accounting period; and (c) had that further claim been the first claim made for a provisional repayment for that accounting period, the provisional fraction for the accounting period would have been a different fraction (whether in consequence of the delivery of a company tax return for a later preceding accounting period or the application of paragraph 1(11) above); and in this paragraph the “substituted provisional fraction” means the different fraction mentioned in paragraph (c) above. (2) Where this paragraph applies— (a) the amount of any provisional repayment to which the company is entitled for the provisional repayment period mentioned in sub-paragraph (1)(b) above shall be an amount determined in accordance with sub-paragraph (3) below or such lesser amount as may be specified in the claim; and (b) in relation to any later provisional repayment period in the same accounting period, the substituted provisional fraction shall, subject to any further application of this paragraph, be treated as the provisional fraction for the accounting period. (3) The amount referred to in sub-paragraph (2) above is the amount (if any) by which total entitlement exceeds total past payments, and for this purpose— “total entitlement” means the aggregate of the provisional repayments to which the company would have been entitled (apart from this paragraph) for— the provisional repayment period to which the claim relates, and any earlier provisional repayment period in the same accounting period, had the substituted provisional fraction been the provisional fraction for the accounting period as from the beginning of that period; and “total past payments” means the aggregate of any amounts already paid by way of provisional repayments for provisional repayment periods falling within that accounting period. (4) Expressions used in this paragraph and in paragraph 1 above have the same meaning in this paragraph as they have in that paragraph. Repayment, with interest, of excessive provisional repayments 3 (1) In any case where— (a) an insurance company’s self-assessment for an accounting period becomes final, and (b) the aggregate amount of the provisional repayments made to the company for that accounting period exceeds the appropriate amount, the excess, together with the amount of any relevant interest, shall be treated for the purposes of paragraph 52 of Schedule 18 to the Finance Act 1998 as if it were an amount of corporation tax for that accounting period which had been repaid to the insurance company and which ought not to have been so repaid. (1ZA) In its application by sub-paragraph (1) above, section 30 of the Management Act shall have effect as if, instead of the provision made by subsection (5), it provided that an assessment under that section by virtue of sub-paragraph (1) above is not out of time under section 34 of that Act if it is made no later than the end of the accounting period following that in which the assessment mentioned in paragraph (a) of that sub-paragraph is finally determined. (1A) For the purposes of sub-paragraph (1)(b) above, the appropriate amount for an accounting period of a company is the amount (if any) which, on the assumptions in sub-paragraphs (1B) and (1C) below and disregarding any provisional repayments, the company would be entitled to be . . . repaid, when its self-assessment for the period becomes final, in respect of its pension business for that accounting period on a claim such as is mentioned in paragraph 9(2) of Schedule 18 to the Finance Act 1998. . . in respect of— (a) income tax borne by deduction on payments received by the company in that accounting period and referable to its pension business, . . . (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1B) The first assumption is that no . . . repayments have been made to the company in respect of— (a) income tax such as is mentioned in paragraph (a) of sub-paragraph (1A) above, . . . (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . before the company’s self-assessment for the accounting period in question becomes final. (1C) The second assumption is that in making any set off under— (a) section 7(2), or (b) paragraph 5 of Schedule 16, . . . (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . income tax borne by deduction on income which is not referable to pension business is set off before income tax so borne on income which is referable to pension business. (1D) Paragraph 53 of Schedule 18 to the Finance Act 1998 (time limit for recovery of excessive repayments etc.) does not apply to an assessment under paragraph 52 of that Schedule made by virtue of this paragraph. But such an assessment is not out of time under paragraph 46 of that Schedule (general six year time limit for assessments) if it is made not later than the end of the accounting period following that in which the self-assessment mentioned in sub-paragraph (1)(a) above becomes final. (2) In this paragraph, “relevant interest” means interest— (a) on so much of the excess referred to in sub-paragraph (1) above as is or was from time to time outstanding, (b) for any period for which it is or was so outstanding, and (c) at the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 87A of the Management Act (interest on overdue corporation tax). (3) In the application of section 87A of the Management Act in relation to an amount assessed to corporation tax under paragraph 52 of Schedule 18 to the Finance Act 1998 by virtue of this paragraph— (a) the amount so assessed shall be taken to have become due and payable on the date on which that assessment was made; and (b) the words “(in accordance with section 59D of this Act)” in subsection (1) shall accordingly be disregarded. (4) In determining the amount of any relevant interest, any question whether the excess mentioned in sub-paragraph (1) above (in the following provisions of this paragraph referred to as “the principal”) or any part of it is or was “outstanding” at any time shall be determined in accordance with sub-paragraphs (5) to (8) below. (5) So much of the principal as does not exceed the amount of the last provisional repayment made to the company for the accounting period in question shall be taken to have become outstanding on the date on which that provisional repayment was made. (6) So much (if any) of the principal as— (a) exceeds the amount of the provisional repayment referred to in sub-paragraph (5) above, but (b) does not exceed the amount of the preceding provisional repayment for that accounting period, shall be taken to have become outstanding on the date on which that preceding provisional repayment was made; and so on with any remaining portion of the principal and any preceding provisional repayments for that accounting period. (7) So much (if any) of the principal as has become outstanding as mentioned in sub-paragraph (5) or (6) above and has at any time neither been repaid to the Board nor been assessed to corporation tax under paragraph 52 of Schedule 18 to the Finance Act 1998 by virtue of this paragraph shall be taken to remain outstanding at that time (and an amount shall accordingly be taken to cease being outstanding only when it is repaid to the Board or when it is so assessed). (8) For the purposes of sub-paragraph (7) above, any repayment made by the company in respect of an amount . . . repaid to it in respect of— (a) income tax such as is mentioned in paragraph (a) of sub-paragraph (1A) above, . . . (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . shall be treated as a repayment in respect of the principal, taking an earlier such repayment by the company before a later. (9) In this paragraph “self-assessment” means an assessment included in a company tax return and includes a reference to such an assessment as amended. Reduced entitlement during transitional period 4 (1) The Board may by regulations make provision for the amount of any provisional repayment to which a company would otherwise be entitled for any accounting period ending after the opening transitional date and before the closing transitional date to be reduced by a prescribed percentage. (2) The regulations may require a company claiming a provisional repayment for a provisional repayment period falling within such an accounting period to specify in the claim— (a) the maximum amount to which it could have been entitled by way of provisional repayment for that provisional repayment period apart from the regulations; (b) the maximum reduced entitlement for that provisional repayment period; and (c) the amount of the provisional repayment claimed for that provisional repayment period. (3) The regulations may make provision— (a) for the charging of interest in any case where an insurance company claims, and is paid, by way of provisional repayment an amount in excess of the maximum reduced entitlement for the provisional repayment period to which the claim relates; (b) for the period for which, and the rate at which, any such amount is to carry interest under the regulations; (c) for any such interest to be treated for the purposes of section 30 of the Management Act as if it were an amount of corporation tax which had been repaid and which ought not to have been repaid; and (d) for section 87A of that Act to apply in relation to an amount assessed to corporation tax under section 30 of that Act by virtue of the regulations with modifications corresponding to those specified in paragraph 3(3) above. (4) The regulations may prescribe for the purposes of sub-paragraph (1) above different percentages for accounting periods ending after different dates. (5) Sub-paragraphs (2) to (4) above are without prejudice to the generality of sub-paragraph (1) above. (6) In this paragraph— “the maximum reduced entitlement”, in relation to an insurance company and a provisional repayment period, means the maximum amount (as reduced in accordance with the regulations) to which the company could have been entitled by way of provisional repayment for that provisional repayment period; “the opening transitional date” and “the closing transitional date” mean respectively such date as the Board may specify for the purpose in the first regulations made under this paragraph; “prescribed” means specified in the regulations; “the regulations” means any regulations under this paragraph. Transitional application of pay and file provisions 5 (1) This paragraph applies in relation to an accounting period of an insurance company if— (a) the accounting period— (i) begins on or after the commencement day; and (ii) ends on or before the day appointed for the purposes of section 10; (b) the company carries on pension business for the whole or part of the accounting period; and (c) the company makes a claim for a provisional repayment for the accounting period; and in this paragraph “transitional accounting period” means an accounting period in relation to which this paragraph applies. (2) An insurance company shall be entitled— (a) to make a claim for payment of a tax credit in respect of any income of a transitional accounting period, and (b) to make a claim for the purposes of section 7(5), so far as relating to section 7(2) or 11(3), in respect of any income tax falling to be set off against corporation tax for a transitional accounting period, (and may do so whether or not the income in question is referable to the company’s pension business). (3) For the purposes of sub-paragraph (2) above, sections 7(2) and 11(3) shall have effect in relation to a transitional accounting period as if the words from “and accordingly” to the end, in each provision, were omitted. (4) A claim under sub-paragraph (2) above may only be made at such time or within such period as the Board may by regulations provide. (5) In the application of this Schedule in relation to a transitional accounting period, paragraph 1 above shall have effect as if the reference in each of sub-paragraphs (7) and (10) to a claim such as is mentioned in section 7(6) or in section 42(5A) of the Management Act were a reference to a claim under paragraph (a) or (b) of sub-paragraph (2) above. (6) If and to the extent that the provisions of section 826, or of section 87A of the Management Act, would not, apart from this sub-paragraph, have effect in relation to a transitional accounting period, they shall be treated as having effect for all purposes in relation to that accounting period; and— (a) in the application of section 826 by virtue of this sub-paragraph, the reference in subsection (1)(a) of that section to an accounting period which ends after the appointed day shall be treated as a reference to a transitional accounting period; and (b) in the application of section 87A of the Management Act by virtue of this sub-paragraph, corporation tax shall be taken to become due and payable on the day following the expiration of the period within which it is required under section 10(1)(b) to be paid. (7) If and to the extent that the amendments of section 30 of the Management Act specified in subsections (1) to (4) of section 88 of the Finance (No.2) Act 1987 would not, apart from this sub-paragraph, have effect in relation to a transitional accounting period, they shall be treated as having effect for all purposes in relation to that transitional accounting period. (8) Subsection (7) of section 88 of the Finance (No.2) Act 1987 shall have effect for the purposes of sub-paragraph (7) above as if the reference in paragraph (a) of that subsection to accounting periods ending after the appointed day were a reference to transitional accounting periods. (9) In this paragraph “the commencement day” means the day appointed under section 49 of the Finance Act 1991. Interpretation 6 (1) In this Schedule— “provisional fraction” shall be construed in accordance with paragraphs 1(4) and 2 above; “provisional repayment” means a provisional repayment under paragraph 1 above; “provisional repayment period” shall be construed in accordance with paragraph 1 above. (2) Any reference in this Schedule to a provisional repayment for an accounting period is a reference to a provisional repayment for a provisional repayment period falling within that accounting period. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Sub-paragraph (5) below applies in any case where an insurance company— (a) which has delivered a return under section 11 of the Management Act for an accounting period ending before the self-assessment appointed day, but (b) which has not delivered its first company tax return for an accounting period ending on or after that day, makes the first claim for a provisional repayment for a particular accounting period ending on or after that day. (5) Where this sub-paragraph applies— (a) the provisional fraction for the accounting period to which the claim mentioned in sub-paragraph (4) above relates shall be determined in accordance with paragraph 1(3), (4), and (6) and sub-paragraph (3) above, as they have effect in relation to accounting periods ending before that day; and (b) paragraph 2 above, as originally enacted, shall have effect in relation to that accounting period as it has effect in relation to accounting periods ending before that day. (6) In this paragraph “the self-assessment appointed day” means the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions).