120 Overseas life insurance companies: rule corresponding to s.119
(1) If the assets of an overseas life insurance company include securities of a class all of which would, but for this section, be regarded as one holding for the purposes of corporation tax on chargeable gains, the following pooling rules apply instead for those purposes—
(a) so many of the securities so far as UK securities matched to BLAGAB liabilities of the company are treated as a separate holding,
(b) so many of the securities so far as UK securities matched to other long-term business liabilities of the company are treated as a separate holding,
(c) so many of the securities as are UK securities held by the company for the purposes of any with-profits fund but not matched to its long-term business liabilities are treated as a separate holding,
(d) so many of the securities as are UK securities held for the purposes of the company's long-term business but not matched to its long-term business liabilities or held by it for the purposes of any with-profits funds are treated as a separate holding,
(e) any remaining UK securities are treated as a separate holding which is held otherwise than for the purposes of the company's long-term business, and
(f) any securities which are held by the company but which are not UK securities are treated as a separate holding.
(2) If the company has more than one with-profits fund within subsection (1)(c), so many of the securities as are UK securities held by it for the purposes of a particular fund but are not matched to its long-term business liabilities are treated as a separate holding for the purposes of corporation tax on chargeable gains.
(3) Subsection (1) does not apply if all the income of the company's long-term business is chargeable to corporation tax on income under section 35 of CTA 2009.
(4) In that case, if the company's assets include securities of a class all of which would, but for this section, be regarded as one holding for the purposes of corporation tax on chargeable gains, the following pooling rules apply instead for those purposes—
(a) so many of the securities as are UK securities held for the purposes of its long-term business are treated as a separate holding,
(b) any remaining UK securities are treated as a separate holding which is held otherwise than for the purposes of its long-term business, and
(c) any securities which are held by the company but which are not UK securities are treated as a separate holding.
(5) For the purposes of this section, securities (whether situated in the United Kingdom or elsewhere) are “UK securities” of an overseas life insurance company if, in accordance with the provision made by or under Chapter 4 of Part 2 of CTA 2009, they fall to be attributed to the permanent establishment in the United Kingdom through which the company carries on life assurance business.
(1) The applicable pooling rules also apply if the assets of the company in question include securities of a class and but for this section—
(a) some of them would be regarded as a 1982 holding for the purposes of corporation tax on chargeable gains, and
(b) the rest of them would be regarded as a section 104 holding for those purposes.
(2) “The applicable pooling rules” means—
(a) the pooling rules set out in section 119(1)(a) to (e) and (4)(a) and (b), or
(b) the pooling rules set out in section 120(1)(a) to (f) and (4)(a) to (c).
(3) In applying the applicable pooling rules in a case within subsection (1)—
(a) the reference in any of the paragraphs in section 119(1) or (4) or 120(1) or (4) to a separate holding is to be read, where necessary, as a reference to a separate 1982 holding and a separate section 104 holding, and
(b) the questions whether that reading is necessary for a paragraph and, if it is, how many securities falling within the paragraph constitute each of the two holdings are determined in accordance with paragraph 12 of Schedule 6 to FA 1990 and the identification rules applying on any subsequent acquisitions and disposals.
(4) If the applicable pooling rules apply, section 105 of TCGA 1992 has effect as if securities regarded as included in different holdings as a result of those rules were securities of different classes.
(5) In this section—
“1982 holding” has the same meaning as in section 109 of TCGA 1992, and
“section 104 holding” has the same meaning as in section 104(3) of TCGA 1992.
(6) In this section and sections 119 and 120 “securities” means—
(a) shares,
(b) securities of a company, and
(c) any other assets where they are of a nature to be dealt in without identifying the particular assets disposed of or acquired.
122 Assets forming part of long-term business fixed capital
For the purposes of this Chapter assets that form part of the long-term business fixed capital of an insurance company are to be regarded as assets held by the company otherwise than for the purposes of its long-term business.
123 Relief for BLAGAB trade losses against total profits
(1) Section 37 of CTA 2010 (relief for trade losses against total profits) is to apply in relation to a BLAGAB trade loss for an accounting period as it applies in relation to any other loss made in a trade for an accounting period.
(2) Subsection (1) applies despite the fact that, had there been a BLAGAB trade profit for the accounting period, that profit would not have been charged to tax under section 35 of CTA 2009 and the I - E rules would have been applicable instead.
124 Carry forward of pre-1 April 2017 BLAGAB trade losses against subsequent profits
(1) This section applies if an insurance company carrying on basic life assurance and general annuity business makes a BLAGAB trade loss for an accounting period beginning before 1 April 2017.
(2) Relief is available under this section for that part of the BLAGAB trade loss (“the unrelieved loss”) for which no relief is given under section 37 of CTA 2010 (as applied by section 123).
(3) The relief for the unrelieved loss is to be given as follows.
(4) The unrelieved loss is to be carried forward to subsequent accounting periods (so long as the company continues to carry on basic life assurance and general annuity business).
(5) For the purposes of—
(a) section 93 (minimum profits charge), and
(b) section 104 (policyholders' rate of tax),
the BLAGAB trade profit of any such period is reduced by the unrelieved loss so far as that loss cannot be used under this subsection to reduce the BLAGAB trade profit of an earlier period ....
(6) Relief under this section is subject to restriction or modification in accordance with section 137(7) of CTA 2010 and other applicable provisions of the Corporation Tax Acts.
124A Carry forward of post-1 April 2017 BLAGAB trade losses against subsequent profits
(1) This section applies if—
(a) an insurance company carrying on basic life assurance and general annuity business makes a BLAGAB trade loss for an accounting period beginning on or after 1 April 2017 (“the loss-making period”),
(b) relief under—
section 37 of CTA 2010 (as applied by section 123), or
Part 5 of CTA 2010 (group relief) (as applied by section 125),
is not given for an amount of the loss (“the unrelieved amount”), and
(c) the company continues to carry on basic life assurance and general annuity business in the next accounting period (“the later period”).
(2) The unrelieved amount is carried forward to the later period.
(3) Relief for the unrelieved amount is given to the company in the later period if the company has a BLAGAB trade profit for the later period.
(4) The relief is given as set out in subsection (5).
(5) For the purposes of—
(a) section 93 (minimum profits charge), and
(b) section 104 (policyholders' rate of tax),
the BLAGAB trade profit of the later period is reduced by the unrelieved amount ....
(6) Relief under this section is subject to restriction or modification in accordance with section 137(7) of CTA 2010 and other applicable provisions of the Corporation Tax Acts.
124B Excess carried forward post-1 April 2017 losses: relief against total profits
(1) This section applies if—
(a) an amount of an insurance company's BLAGAB trade loss for an accounting period is carried forward to an accounting period of the company (“the later period”) under section 124A(2) or 124C(3), and
(b) any of that amount (“the unrelieved amount”) is not deducted under section 124A(5) or 124C(6) (as the case may be) from the company's BLAGAB trade profit (if any) of the later period.
(2) The company may make a claim for relief to be given for the unrelieved amount under this section.
(3) If the company makes a claim, the relief is given by deducting the unrelieved amount, or any part of it specified in the claim, from the company's total profits of the later period.
(4) But (if the company is a Solvency 2 insurance company)—
(a) the company may not make a claim under this section if the unrelieved amount is wholly a shock loss, and
(b) the company may not make a claim specifying a part of the unrelieved amount if that part is (to any extent) a shock loss.
(5) For the purposes of subsection (4) assume that in any use by the company of the BLAGAB trade loss for relief under—
(a) section 37 of CTA 2010 (as applied by section 123),
(b) Part 5 of CTA 2010 (as applied by section 125), or
(c) section 124A(5) or 124C(6),
any part of it that is a shock loss is used before any part of it that is not a shock loss.
(6) A claim under this section must be made—
(a) within the period of two years after the end of the later period, or
(b) within such further period as an officer of Revenue and Customs may allow.
(7) Relief under this section is subject to restriction or modification in accordance with section 137(7) of CTA 2010 and other applicable provisions of the Corporation Tax Acts.
(8) In this section—
“Solvency 2 insurance company” means an insurance undertaking, a reinsurance undertaking or a third-country insurance undertaking;
“insurance undertaking” has the meaning given in Article 13(1) of the Solvency 2 Directive;
“reinsurance undertaking” has the meaning given in Article 13(4) of the Solvency 2 Directive;
“Solvency 2 Directive” means Directive 2009/138/EC of the European Parliament and the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II);
“shock loss” has the meaning given by section 269ZK of CTA 2010;
“third-country insurance undertaking” means an undertaking that has received authorisation under Article 162 of the Solvency 2 Directive from the Prudential Regulation Authority or the Financial Conduct Authority.
124C Further carry forward against subsequent profits of post-1 April 2017 loss not fully used
(1) This section applies if—
(a) an amount of an insurance company's BLAGAB trade loss for an accounting period is carried forward to an accounting period (“the later period”) of the company under section 124A(2) or subsection (3) of this section,
(b) any of that amount is unrelieved in the later period, and
(c) the company continues to carry on basic life assurance and general annuity business in the accounting period (“the further period”) after the later period.
(2) An amount carried forward as mentioned in subsection (1)(a) is “unrelieved in the later period” so far as it is not—
(a) deducted under section 124A(5) or subsection (6) of this section from the company's BLAGAB trade profit (if any) of the later period,
(b) deducted from the company's total profits of the later period on a claim under 124B, or
(c) surrendered by way of group relief for carried-forward losses under Part 5A of CTA 2010.
(3) So much of the amount mentioned in subsection (1)(a) as is unrelieved in the later period is carried forward to the further period.
(4) Relief for the amount carried forward under subsection (3) (“the remaining carried forward amount”) is given to the company in the further period if the company has a BLAGAB trade profit for that period.
(5) The relief is given as set out in subsection (6).
(6) For the purposes of—
(a) section 93 (minimum profits charge), and
(b) section 104 (policyholders' rate of tax),
the BLAGAB trade profit of the further period is reduced by the remaining carried forward amount ....
(7) Relief under this section is subject to restriction or modification in accordance with section 137(7) of CTA 2010 and other applicable provisions of the Corporation Tax Acts.
(1) Part 5 of CTA 2010 (group relief) is to apply in relation to a BLAGAB trade loss for an accounting period as it applies in relation to any other loss made in a trade for an accounting period.
(2) Subsection (1) applies despite the fact that, had there been a BLAGAB trade profit for the accounting period, that profit would not have been charged to tax under section 35 of CTA 2009 and the I - E rules would have been applicable instead.
(3) If for an accounting period an insurance company has—
(a) an I - E profit, and
(b) losses or other amounts within section 99(1)(d) to (g) of CTA 2010,
the company's gross profits of the accounting period for the purposes of section 105 of that Act (restriction on surrender of those amounts) are not to include the policyholders' share of the I - E profit (as determined for the purposes of section 102).
(4) For provision about the application of Part 5A of CTA 2010 (group relief for carried-forward losses) in relation to BLAGAB trade losses see subsections (3) to (5) of section 188BB of that Act.
126 Restrictions in respect of non-trading deficit
(1) The amount of a BLAGAB trade loss for an accounting period of an insurance company that is available for relief under—
(a) section 37 of CTA 2010 (as applied by section 123), or
(b) Part 5 of CTA 2010 (group relief) (as applied by section 125),
is to be reduced by the amount of any relevant non-trading deficit which the company has for the accounting period.
(1A) A loss falls within subsection (1B) so far as it—
(a) would (apart from that subsection) be available for relief under section 124B (excess carried forward post-1 April 2017 losses: relief against total profits), and
(b) arose in an accounting period for which the insurance company has a relevant non-trading deficit.
(1B) A loss (or amount of a loss) falling within this subsection is available for relief under section 124B only so far as it exceeds the amount of that relevant non-trading deficit.
(1C) A loss falls within subsection (1D) so far as it—
(a) is an amount which a company (“the surrendering company“) may surrender by virtue of section 188BB(4) (surrender of carried-forward BLAGAB trade losses), and
(b) arose in an accounting period for which the surrendering company has a relevant non-trading deficit.
(1D) A loss (or amount of a loss) falling within this subsection is available for relief under Chapter 3 of Part 5A of CTA 2010 (claims for group relief) only so far as it exceeds the amount of that relevant non-trading deficit.
(1E) For the purposes of subsections (1A) and (1C) it is to be assumed (where relevant) that in previous accounting periods losses which arose earlier have been utilised before losses which arose later.
(2) In this section references to a relevant non-trading deficit for an accounting period are to the non-trading deficit which the company has, calculated by reference only to credits and debits—
(a) arising in respect of such of the company's loan relationships as are debtor relationships (see section 302(6) of CTA 2009), and
(b) referable, in accordance with Chapter 4, to the company's basic life assurance and general annuity business.
127 No relief against policyholders' share of I - E profit
(1) This section applies in the case of an insurance company carrying on basic life assurance and general annuity business.
(2) None of the following reliefs are to be given against the policyholders' share of any I - E profit of the company for any accounting period (as determined for the purposes of section 102).
(3) The reliefs in question are—
(za) relief under section 124B (relief of excess carried-forward BLAGAB trade losses against total profits),
(a) relief under section 37 of CTA 2010 (including as applied by section 123),
(b) relief under Chapter 2 or 4 of Part 4 of CTA 2010 (loss relief),
(c) relief under Part 5 of CTA 2010 (group relief) (including as applied by section 125),
(ca) relief under Chapter 3 of Part 5A of CTA 2010 (group relief for carried-forward losses),
(d) relief in respect of any qualifying charitable donation,
(e) relief in respect of any amount representing a non-trading deficit on the company's loan relationships calculated otherwise than by reference to debits and credits referable, in accordance with Chapter 4, to its basic life assurance and general annuity business.
(4) If the company's basic life assurance and general annuity business is mutual business, subsection (3)(d) does not apply.
128 Relief for transferee in respect of transferor's excess BLAGAB expenses
(1) This section applies if, under an insurance business transfer scheme, there is a transfer of basic life assurance and general annuity business (or any part of that business) from one insurance company to another.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Relief at step 5 in section 76 is to be given to the transferee for any excess BLAGAB expenses for which, on the assumptions set out below, that relief would have been given to the transferor for an accounting period starting after the date of the transfer.
(6) For the purposes of this section it is to be assumed that—
(a) the transferor had continued to carry on the transferred business after the transfer, and
(b) the transferor had an accounting date ending with the date of the transfer (if that would not otherwise be the case).
(7) If the transfer is a transfer of part of the business, references in this section to any expenses are to be read as references to the appropriate part of the expenses.
(8) Any relief given to the transferee as a result of this section is instead of any relief that would otherwise have been given to the transferor.
(1) This section applies if—
(a) under an insurance business transfer scheme, there is a transfer of basic life assurance and general annuity business (or any part of that business) from one insurance company to another, and
(b) the transfer is a relevant intra-group transfer or is in connection with a demutualisation.
(2) A transfer is a “relevant intra-group transfer” if—
(a) the transferor and transferee are members of the same group of companies when the transfer occurs, and
(b) the transferee is within the charge to corporation tax in relation to the transfer.
(3) A transfer is “in connection with a demutualisation” if—
(a) it is for the purposes of the conversion of a company (under the law of any territory) from one without share capital to one with share capital (without any change of legal personality), or
(b) it is a transfer by a mutual life insurance company of all, or substantially all, of its basic life assurance and general annuity business to an insurance company which is not a mutual life insurance company,
and for the purposes of paragraph (b) a “mutual life insurance company” means an insurance company which carries on mutual life assurance business.
(4) For the purpose of calculating the BLAGAB trade profit or loss of the transferor for any accounting period, any amount in respect of the transfer that is debited or credited in accounts drawn up by the transferor in accordance with generally accepted accounting practice is to be ignored.
(5) For the purpose of calculating the BLAGAB trade profit or loss of the transferee for any accounting period, any amount in respect of the transfer that is debited or credited in accounts drawn up by the transferee in accordance with generally accepted accounting practice is to be ignored.
(6) But if there is a difference between—
(a) the net amount recognised by the transferee in respect of the transfer of contracts of long-term insurance or contracts made in the course of capital redemption business, and
(b) the net amount recognised by the transferor in respect of the transfer of those contracts,
the amount of the difference is to be taken into account for the purpose of calculating the BLAGAB trade profit or loss of the transferee for the accounting period in which those contracts are transferred.
(7) The difference is to be taken into account—
(a) as a receipt (if, when added to the net amount in subsection (6)(b), the result is the net amount in subsection (6)(a)), and
(b) as an expense (if, when subtracted from the net amount in subsection (6)(b), the result is the net amount in subsection (6)(a)).
(8) The net amount recognised by an insurance company in respect of the transfer of the contracts is determined by subtracting—
(a) the total amount in respect of relevant liabilities relating to the contracts that is or would be recognised for the purposes of a balance sheet drawn up at the relevant time by the company in accordance with generally accepted accounting practice, from
(b) the total amount in respect of relevant assets relating to the contracts that is or would be recognised for those purposes,
In this paragraph, “relevant liabilities” and “relevant assets” means those liabilities and assets which give rise to amounts that are taken into account as part of the calculation under Chapter 6 of Part 2, and “relevant time” means the time immediately before the transfer (in the case of the transferor) and the time immediately after it (in the case of the transferee).
(9) The Treasury may by order amend any of subsections (6) to (8).
(10) This section does not apply to any amount that arises in respect of a transfer so far as the transfer consists of a with-profits fund transfer.
The reference here to a with-profits fund transfer is a reference to—
(a) a transfer of business from a with-profits fund to a fund that is not a with-profits fund, or
(b) a transfer of business from a fund that is not a with-profits fund to a with-profits fund.
(11) If this section applies, the provisions of Part 4 of TIOPA 2010 (transfer pricing) do not apply.
130 Transfers between non-group companies: present value of in-force business
(1) This section applies if—
(a) under an insurance business transfer scheme, there is a transfer of basic life assurance and general annuity business (or any part of that business) from one insurance company to another,
(b) either the transferor and transferee are not members of the same group of companies when the transfer occurs or, if they are, the transfer consists of or includes a with-profits fund transfer within the meaning of section 129(10),
(c) the accounts of the transferee drawn up in accordance with generally accepted accounting practice include an asset that represents, as at the time of the transfer, the value of future profits arising from the relevant transferred business, and
(d) the asset is not one to which Part 8 of CTA 2009 (intangible fixed assets) applies.
(2) Amounts in respect of the asset that are debited or credited in accounts drawn up by the transferee in accordance with generally accepted accounting practice are to be taken into account in calculating the BLAGAB trade profit or loss of the transferee.
(3) In subsection (1)(c) “the relevant transferred business” means—
(a) if the transferor and transferee are not members of the same group of companies when the transfer occurs, the business (or part of the business) transferred under the insurance business transfer scheme, and
(b) if the transfer consists of or includes a with-profits fund transfer, the business transferred by the with-profits fund transfer.
(4) For the purposes of subsection (1)(c) no account is to be taken of an asset so far as it is regarded for accounting purposes as internally-generated.
(5) This section does not apply so far as section 129(5) applies in relation to the transfer.
(6) Nothing in this section is to apply in relation to transfers taking place before 1 January 2013.
130A Re-insurance in the course of transfer of BLAGAB
(1) This section applies to a re-insurer in relation to the re-insurance of the whole, or part of, a cedant’s basic life assurance and general annuity business, if—
(a) the business is not excluded business for the purposes of section 57(2)(e), and
(b) it is reasonable to suppose that the arrangements for the re-insurance are made, or are operated, in connection with an insurance business transfer scheme under which the business will be transferred to the re-insurer or a person connected with the re-insurer.
(2) Where the arrangements are operated, but were not made, in connection with the insurance business transfer scheme, this section is to apply to the re-insurer from the later of—
(a) the beginning of the accounting period in which it is reasonable to suppose that the arrangements were first operated in connection with the transfer, and
(b) 15 December 2022.
(3) Where this section applies in relation to re-insurance, that re-insurance (so far as it is of basic life assurance and general annuity business) is to be treated as excluded business for the purposes of section 57(2)(e) (and that business is referred to in this section as “the re-insured business”).
(4) Accordingly—
(a) the re-insured business is, or forms part of, the separate basic life assurance and general annuity business of the re-insurer (see section 66(2)), and
(b) accounting profit or loss and the tax adjustments (within the meaning of section 114(4)) referable to the re-insured business are, for the purposes of provision made by or under this Part or Schedule 5 to FA 2022, to be allocated to the basic life assurance and general annuity business.
(5) But, subject to subsection (6), no amount referable to the re-insured business is to be included in the determination of the I-E profit of the re-insurer for an accounting period (and accordingly, subject to that subsection, the I-E profit referable to that business for the accounting period will be nil).
(6) Any BLAGAB trade loss relieved for an accounting period (see section 78(5)) that is referable to the re-insured business is to be included (as a deduction in Step 4 in section 76) in determining the adjusted BLAGAB management expenses of the re-insurer for the accounting period (which, accordingly, may result in the I-E profit referable to that business for the accounting period being greater than nil).
(7) Nothing in this section is to be taken to affect the liability of the cedant to corporation tax.
(8) For the purposes of this section “arrangements” includes any agreement, scheme, transaction or understanding (whether or not legally enforceable).
(9) Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this section.
131 Application of ss. 129 and 130 to transfers of non-BLAGAB long-term business
(1) This section applies if, under an insurance business transfer scheme, there is a transfer of non-BLAGAB long-term business (or any part of that business) from one insurance company to another.
(2) If, for the purposes of section 129, the transfer—
(a) is a relevant intra-group transfer, or
(b) is in connection with a demutualisation,
section 129 applies for the purpose of calculating for corporation tax purposes the profits of the non-BLAGAB long-term business of the transferor or transferee for any accounting period.
(3) If the conditions in section 130(1)(b) to (d) are met in the case of the transfer, section 130 applies for the purpose of calculating for corporation tax purposes the profits of the non-BLAGAB long-term business of the transferee for any accounting period.
(1) This section applies if—
(a) under an insurance business transfer scheme, there is a transfer on or after 1 January 2013 from one insurance company to another of basic life assurance and general annuity business (or any part of that business) or non-BLAGAB long-term business (or any part of that business), and
(b) the main purpose, or one of the main purposes, of a company (“C”) in entering into one or more of the arrangements included in the insurance business transfer arrangements is an unallowable purpose.
(2) The “insurance business transfer arrangements” consist of—
(a) the insurance business transfer scheme under which the transfer is made, and
(b) any arrangement entered into on or after 1 January 2013 with a connection (direct or indirect) to that scheme.
(3) A purpose is an “unallowable purpose” if—
(a) it consists of securing a tax advantage for C or any other company, or
(b) it is not amongst C's business or other commercial purposes.
(4) There are to be made such adjustments of any income or gains chargeable to corporation tax as are required to negate any tax advantage arising to C or any other company so far as referable to the unallowable purpose on a just and reasonable apportionment.
(5) For the purposes of this section—
(a) “arrangement” includes any agreement, scheme, transaction or understanding (whether or not legally enforceable), and
(b) section 1139 of CTA 2010 (meaning of “tax advantage”) applies, but reading references to tax as references to corporation tax.
(6) If C is not within the charge to corporation tax in respect of a part of its activities, C's business or other commercial purposes for the purposes of this section do not include the purposes of that part of its activities.
(1) Section 132 does not apply if, on an application by C, HMRC Commissioners give a notice under this section stating that they are satisfied—
(a) that C's main purpose in entering into the arrangements included in the insurance business transfer arrangements is not an unallowable purpose or none of C's main purposes in entering into those arrangements is an unallowable purpose, or
(b) that the transferor and the transferee are members of the same group of companies when the transfer occurs and that the transfer produces no tax advantage for the group.
(2) For this purpose the transfer produces no tax advantage for the group if—
(a) as a result of the insurance business transfer arrangements, there is an increase in the liability to corporation tax of one or more companies which are members of the group, and
(b) the amount (or total amount) of that increase is at least equal to the amount (or total amount) of the reduction in the liability to corporation tax of the transferor or the transferee that arises as a result of those arrangements.
(1) An application under section 133 must—
(a) be in writing, and
(b) contain particulars of the insurance business transfer arrangements.
(2) HMRC Commissioners may by notice require C to provide further particulars in order to enable them to determine the application.
(3) A requirement may be imposed under subsection (2) within 30 days of the receipt of the application or of any further particulars required under that subsection.
(4) If a notice under that subsection is not complied with within 30 days or such longer period as HMRC Commissioners may allow, they need not proceed further on the application.
(5) HMRC Commissioners must give notice to C of their decision on an application under section 133—
(a) within 30 days of receiving the application, or
(b) if they give a notice under subsection (2), within 30 days of that notice being complied with.
(6) If any particulars provided under this section do not fully and accurately disclose all facts and considerations material for the decision of HMRC Commissioners, any resulting notice under section 133 is void.
For the purposes of this Chapter whether or not at any time companies are members of the same group of companies is to be determined in accordance with section 170(2) to (11) of TCGA 1992.
136 Meaning of “BLAGAB trade profit” and “BLAGAB trade loss”
(1) In relation to the carrying on by an insurance company of basic life assurance and general annuity business, this section explains for the purposes of this Part what is meant by—
(a) the “BLAGAB trade profit” of the company, and
(b) the “BLAGAB trade loss” of the company.
(2) The company has a “BLAGAB trade profit” for an accounting period if, calculated in accordance with the ordinary trading rules, there are profits of that business for the accounting period that, but for sections 68 and 69, would be chargeable to corporation tax on income under section 35 of CTA 2009 (charge to tax on trade profits).
(3) The amount of the BLAGAB trade profit is the amount of those profits that, but for those sections, would be so chargeable.
(4) The company has a “BLAGAB trade loss” for an accounting period if, calculated in accordance with the ordinary trading rules, the company makes a loss in that business for the accounting period in a case where, had there been profits, they would, but for those sections, have been so chargeable.
(5) The ordinary trading rules have effect for the purpose of calculating the company's BLAGAB trade profit or loss subject to the provision made by—
(a) sections 106 to 108 (policyholder tax),
(b) Chapter 6 (trade calculation rules applying to long-term business),
(c) Chapter 7 (trading apportionment rules), and
(d) sections 129 and 130 (transfers of BLAGAB).
(6) For the purposes of this section “the ordinary trading rules” means the rules for calculating the profits of a trade for the purposes of the charge to corporation tax on income under section 35 of CTA 2009.
137 Meaning of “the long-term business fixed capital”
(1) This section explains for the purposes of this Part what is meant by an asset forming part of “the long-term business fixed capital” of an insurance company.
(2) An asset forms part of “the long-term business fixed capital” of the company if—
(a) it is held for the purposes of its long-term business, and
(b) it is a structural asset of that business.
(3) The reference to a structural asset of a company's long-term business includes shares, debts and loans which—
(a) are held by the company in a fund that is not a with-profits fund, and
(b) are of a kind that, if they had been held on 31 December 2012, their value would have been required to be entered in lines 21 to 24 of Form 13 in the periodical return of the company for the period ending immediately before 1 January 2013 (UK insurance dependants and other insurance dependants).
(4) For the purposes of subsection (3)(b) “periodical return” has the same meaning as it has in Chapter 1 of Part 12 of ICTA.
(5) The Treasury may make regulations providing for assets of a company's long-term business which are of a description specified in the regulations to be regarded for the purposes of this section as being, or as not being, structural assets of that business.
138 Meaning of assets that are “matched to” liabilities
(1) This section—
(a) defines for the purposes of this Part what is meant by an asset that is matched to a BLAGAB liability or other long-term business liability and what is meant by the whole or a part of an asset being matched, and
(b) explains for those purposes how to work out the part of an asset that is matched to a BLAGAB liability or other long-term business liability.
(2) An asset is matched to a BLAGAB liability if, in accordance with the applicable method, some or all of the income or other return arising from that particular asset is specifically referable to the company's basic life assurance and general annuity business.
(3) An asset is matched to another long-term business liability if, in accordance with the applicable method, some or all of the income or other return arising from that particular asset is specifically referable to the company's non-BLAGAB long-term business.
(4) The whole of an asset is matched to a BLAGAB liability if, in accordance with the applicable method, the whole of the income or other return arising from that particular asset is specifically referable to the company's basic life assurance and general annuity business.
(5) A part of an asset is matched to a BLAGAB liability or other long-term business liability if, in accordance with the applicable method, part of the income or other return arising from that particular asset is specifically referable to the company's basic life assurance and general annuity business or (as the case may be) its non-BLAGAB long-term business.
(6) A part of an asset is matched to a BLAGAB liability or other long-term business liability in proportion to the income or other return arising from that particular asset that, in accordance with the applicable method, is specifically referable to the company's basic life assurance and general annuity business or (as the case may be) its non-BLAGAB long-term business.
(7) For the purposes of this section “the applicable method”—
(a) in relation to the company's basic life assurance and general annuity business, means the method adopted for the purposes of section 98 which has effect in relation to the period of account in which the income or other return arises, and
(b) in relation to the company's non-BLAGAB long-term business, means the method adopted for the purposes of section 115 which has effect in relation to the period of account in which the income or other return arises.
(8) For the purposes of this section any income or other return arising from an asset is to be regarded as specifically referable to a category of business in accordance with the applicable method in so far as that method is adopted in relation to the income or other return in consequence of a contractual requirement imposed on the company relating to the category of business in question.
(1) In this Part—
“closing”, in relation to a period of account, means the position at the end of the period of account,
“derivative contract” has the same meaning as in Part 7 of CTA 2009,
“fair value”—
in relation to money, means its amount, and
in relation to other assets, means the amount which an independent person selling the assets would get,
“HMRC Commissioners” means the Commissioners for Her Majesty's Revenue and Customs,
“insurance business transfer scheme” means—
a scheme falling within section 105 of FISMA 2000, including an excluded scheme falling within Case 2, 3, 4 or 5 of subsection (3) of that section, or
a scheme which would fall within that subsection but for subsection (1)(b) of that section,
“insurance special purpose vehicle” means an undertaking which—
assumes risks from insurance or re-insurance undertakings, and
fully funds its exposures to those risks through the proceeds of a debt issue or other financing mechanism where the repayment rights of the providers of the mechanism are subordinated to the re-insurance obligations of the undertaking,
“liabilities”, in relation to an insurance company, means—
the mathematical reserves of the company as determined in accordance with section 1.2 of the INSPRU, and
liabilities of the company (whose value falls to be determined in accordance with section 1.3 of the GENPRU) which arise from deposit back arrangements,
“overseas life insurance company” means an insurance company which is not resident in the United Kingdom but which carries on life assurance business in the United Kingdom through a permanent establishment there,
“re-insurance” includes retrocession,
“UK life insurance company” means an insurance company other than an overseas life insurance company,
“with-profits fund” has the meaning given by the IPRU (INS).
(2) In this Part any reference to the debiting or crediting of an amount in accounts drawn up by an insurance company is a reference to bringing in the amount as a debit or credit in—
(a) the company's profit and loss account, income statement or statement of comprehensive income (or other comprehensive income),
(b) a statement of total recognised gains and losses, or
(c) any other statement of items used in calculating the company's income or gains, or its losses or expenses, for accounting purposes,
irrespective of how any account or statement within any of paragraphs (a) to (c) is described or otherwise referred to.
(3) For this purpose—
“credit” means an amount which for accounting purposes increases or creates a profit, or reduces a loss, for a period of account, and
“debit” means an amount which for accounting purposes reduces a profit, or increases or creates a loss, for a period of account.
(4) In this section—
“deposit back arrangements” means arrangements by which an amount is deposited by the re-insurer under a contract of re-insurance with the cedant,
“GENPRU” means the General Prudential Sourcebook made by the Prudential Regulation Authority under FISMA 2000,
“INSPRU” means the Prudential Sourcebook for Insurers made by the Prudential Regulation Authority under FISMA 2000, and
“IPRU (INS)” means the Interim Prudential Sourcebook for Insurers made by the Prudential Regulation Authority under FISMA 2000.
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(1) In this Part—
“FISMA 2000” means the Financial Services and Markets Act 2000, and
“FISMA (Regulated Activities) Order 2001” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
(2) For abbreviations of other Acts, see section 228.
(1) In this Part the following expressions are defined or otherwise explained by the provisions indicated—
Expression | Where explained
basic life assurance and general annuity business (abbreviated to “BLAGAB”) | sections 57 and 67(5)
BLAGAB trade loss | section 136
BLAGAB trade profit | section 136
closing | section 139(1)
contract of insurance | section 64
contract of long-term insurance | section 64
debiting or crediting an amount in accounts drawn up by a company | section 139(2) and (3)
derivative contract | section 139(1)
excess BLAGAB expenses | section 73
fair value | section 139(1)
HMRC Commissioners | section 139(1)
I - E profit | section 73
the I - E rules | section 70(1) and (2)
insurance business transfer scheme | section 139(1)
insurance company | section 65
insurance special purpose vehicle | section 139(1)
liabilities | section 139(1)
life assurance business | section 56
long-term business | section 63(1)
long-term business fixed capital | section 137
matched (in case of assets matched to a BLAGAB liability or other long-term business liability) | section 138
non-BLAGAB long-term business | sections 66 and 67
non-taxable distributions | section 94(4) and (5)
overseas life insurance company | section 139(1)
PHI business | section 63(2)
re-insurance | section 139(1)
UK life insurance company | section 139(1)
with-profits fund | section 139(1)
(2) The expressions in the above table have the same meaning in any other provision of the Corporation Tax Acts that makes special provision in relation to—
(a) insurance companies,
(b) any category of life assurance business carried on by insurance companies, or
(c) long-term business carried on by insurance companies.
(1) If, in consequence of the exercise of any power under FISMA 2000, they consider it expedient to do so, the Treasury may by order amend—
(a) this Part, or
(b) any other provision of the Corporation Tax Acts that makes special provision in relation to insurance companies, any category of life assurance business carried on by insurance companies or long-term business carried on by insurance companies.
(2) An order under subsection (1) may be made so as to have effect in relation to—
(a) any period ending on or before the day on which the order is made, or
(b) any period beginning before and ending after that day,
but only if the power under FISMA 2000 is exercised so as to have effect in relation to the period.
(3) An order under subsection (1) may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
143 Power to amend definition of “insurance business transfer scheme” etc
(1) If, in consequence of any amendment of section 105 of FISMA 2000 (insurance business transfer schemes), they consider it expedient to do so, the Treasury may by order amend—
(a) the definition of “insurance business transfer scheme” given by section 139, or
(b) any other provision of the Corporation Tax Acts that makes special provision in relation to insurance companies, any category of life assurance business carried on by insurance companies or long-term business carried on by insurance companies.
(2) An order under subsection (1) may be made so as to have effect in relation to—
(a) any period ending on or before the day on which the order is made, or
(b) any period beginning before and ending after that day,
but only if the amendment of section 105 of FISMA 2000 has effect in relation to that period.
(3) An order under subsection (1) may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
144 Power to modify provisions applying to overseas life insurance companies
(1) The Treasury may by regulations provide for the Corporation Tax Acts to have effect in relation to overseas life insurance companies subject to such exceptions and other modifications as may be prescribed by the regulations.
(2) The power under subsection (1) includes power to make provision in place of, and in consequence to repeal or revoke, any provision in relation to overseas life insurance companies which is made by or under—
(a) this Part, or
(b) any other provision of the Corporation Tax Acts.
(3) Regulations under subsection (1) may be made so as to have effect in relation to any period ending on or after the day on which the regulations are made.
(4) Regulations under subsection (1) may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
(5) The power to make consequential provision conferred by subsection (4)(b) includes power to amend any provision made by or under any Act.
(1) Any power of the Treasury or HMRC Commissioners to make any order or regulations under this Part is exercisable by statutory instrument.
(2) Any statutory instrument containing any order or regulations made by the Treasury or HMRC Commissioners under this Part is subject to annulment in pursuance of a resolution of the House of Commons.
(3) Nothing in this Part that authorises the inclusion of any particular kind of provision in any order or regulations under this Part is to be read as restricting the generality of the provision that may be included in the order or regulations.
(1) The provisions of this Part (other than section 149) have effect in relation to accounting periods of companies beginning on or after 1 January 2013.
(2) Subsection (1) is subject to the operation of any provision of Schedule 17 in relation to times before that date.
(1) If, apart from this section, an insurance company would have had an accounting period beginning before 1 January 2013 and ending on or after that date, the accounting period of the company is to end instead on 31 December 2012.
(2) Accordingly, the rules in section 10 of CTA 2009 (end of accounting period) are subject to this section.
(1) This Part makes special provision for corporation tax purposes in relation to long-term and other business carried on by friendly societies.
(2) Sections 151 and 152 contain provision for applying provisions of the Corporation Tax Acts relating to insurance companies so that they also apply to friendly societies, subject to provision made by regulations.
(3) Sections 153 to 163 make provision for, and in connection with, a special exemption from corporation tax for BLAGAB or eligible PHI business.
(4) Sections 164 to 169 make provision for, and in connection with, a further exemption from corporation tax for other business.
(5) The remainder of the Part contains—
(a) provision in relation to certain transfer schemes (see section 170),
(b) provision for an exemption from corporation tax for unregistered friendly societies (see section 171), and
(c) definitions and other supplementary material (see sections 172 to 179).
151 Friendly societies subject to same basic rules as mutual insurers
(1) The Corporation Tax Acts apply to—
(a) life assurance business carried on by friendly societies, and
(b) other long-term business carried on by friendly societies,
in the same way as they apply respectively to mutual life assurance business carried on by insurance companies and other long-term business carried on by insurance companies.
(2) Subsection (1) does not apply to business which is exempt BLAGAB or eligible PHI business.
(3) The Treasury may by regulations provide that the Corporation Tax Acts as applied by subsection (1) have effect subject to such exceptions or other modifications as may be prescribed by the regulations.
(4) The regulations may require any part of any business to be treated as a separate business.
(5) The regulations may make provision having retrospective effect.
(6) The regulations may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
152 Friendly societies subject to transfer of business rules
(1) In this section “the transfer of business rules” means—
(a) Chapter 10 of Part 2, and
(b) any other provisions of the Corporation Tax Acts that apply on the transfer from an insurance company to another insurance company of the whole or part of its life assurance business or of its other long-term business.
(2) The transfer of business rules apply in the same way—
(a) on the transfer of the whole or part of the business of a friendly society to another friendly society,
(b) on the amalgamation of friendly societies,
(c) on the transfer of the whole or part of the business of a friendly society to a company which is not a friendly society,
(d) on the conversion of a friendly society into a company which is not a friendly society, and
(e) on the transfer of the whole or part of the business of an insurance company to a friendly society.
(3) The Treasury may by regulations provide that the transfer of business rules as applied by subsection (2) have effect subject to such exceptions or other modifications as may be prescribed by the regulations.
(4) The regulations may make provision having retrospective effect.
(5) The regulations may—
(a) make different provision for different cases or circumstances, and
(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.
153 Exemption for certain BLAGAB or eligible PHI business
(1) A friendly society is not liable to pay corporation tax (whether on income or chargeable gains) on its profits arising from exempt BLAGAB or eligible PHI business.
(2) The exemption applies only if the society makes a claim.
(3) For the meaning of “BLAGAB or eligible PHI business”, see section 154.
(4) For the meaning of “exempt” BLAGAB or eligible PHI business, see section 155.