The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001

• Citation: S.I. 2001/3629
• Sections: 193

Section 1 Citation and commencement

(1) This Order may be cited as the Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001.

(2) Subject to any express provision as to the effect of the provisions of this Order—

(a) Parts 1 and 2 shall come into force on 1st December 2001 immediately after the coming into force of sections 411 and 432(1) of, and Schedule 20 to, the Financial Services and Markets Act 2000;

(b) Part 3 shall come into force on 1st December 2001 immediately after the coming into force of Parts 1 and 2 of this Order.

Section 2 Interpretation

In this Order—

“chargeable securities” has the meaning given by section 99(3) to (12) of the Finance Act 1986 ;

“instrument” has the meaning given by section 122(1) of the Stamp Act 1891 ;

“period of account” has the meaning given by section 834(1) of the Income and Corporation Taxes Act 1988 .

Section 3 Returns and other information: stock jobbers' transactions

In section 21(7) of the Taxes Management Act 1970 in the definition of “broker” for “of the Financial Services Act 1986” substitute “given by section 285(1)(a) of the Financial Services and Markets Act 2000”.

Section 4 Composition agreements in relation to stamp duty

(1) Amend section 33 of the Finance Act 1970 (composition agreements by certain bodies in relation to stamp duty chargeable on transfers of securities) as follows.

(2) In subsection (1)—

(a) for “recognised stock exchange” in the first place where it occurs substitute “recognised investment exchange or recognised clearing house”;

(b) omit the definition of “recognised stock exchange”.

(3) In subsections (2)(b), (c) and (d), (4) and (5) for “stock exchange” substitute “recognised investment exchange or recognised clearing house”.

(4) After subsection (6) add—

(7) In this section “recognised investment exchange” and “recognised clearing house” have the meanings given by section 285(1) of the Financial Services and Markets Act 2000.

Section 5 Settled property: qualifying interests in possession

(1) Amend section 59 of the Inheritance Tax Act 1984 (conditions to be met in relation to qualifying interests in possession) as follows.

(2) In subsection (3)(b) for the words from “either” to the end substitute

has permission—

under Part 4 of the Financial Services and Markets Act 2000, or

under paragraph 15 of Schedule 3 to that Act (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule),

to effect or carry out contracts of long-term insurance.

(3) After subsection (3) add—

(4) In subsection (3)(b) above “contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 .

(4) This Article has effect in relation to the making, on an anniversary or other occasion on or after 1st December 2001, of any charge to tax under section 64 or 65 of the Inheritance Tax Act 1984.

Section 6 Introduction

Amend the Finance Act 1986 in accordance with Articles 7 to 12.

Section 7 Stamp duty: intermediaries

(1) Amend section 80B(2) (intermediaries: provisions supplementary to section 80A) as follows.

(2) In the definition of “collective investment scheme” for “75 of the Financial Services Act 1986” substitute “235 of the Financial Services and Markets Act 2000”.

(3) For the definition of “insurance business” substitute—

“insurance business” means business which consists of the effecting or carrying out of contracts of insurance and, for the purposes of this definition, “contract of insurance” has the meaning given in Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

“the operator”, in relation to a collective investment scheme, shall be construed in accordance with section 237(2) of the Financial Services and Markets Act 2000;

(4) For the definition of “trustee” and “the operator” substitute—

“trustee”, in relation to a collective investment scheme, means a trustee or a depositary within the meaning given in section 237(2) of the Financial Services and Markets Act 2000.

(5) This Article has effect in relation to any instrument executed on or after 1st December 2001.

Section 8 Stamp duty: interpretation of sections 81, 82 and 84

(1) Amend section 85(5) of the Finance Act 1986 (supplementary provisions) as follows.

(2) In paragraph (b) for “of the Financial Services Act 1986” substitute “given by section 285(1)(a) of the Financial Services and Markets Act 2000”.

(3) In paragraph (c) for “of the Financial Services Act 1986” substitute “given by section 285(1)(b) of the Financial Services and Markets Act 2000”.

(4) This Article has effect in relation to any instrument executed on or after 1st December 2001.

Section 9 Stamp duty reserve tax: intermediaries

(1) Amend section 88B(2) (provisions supplementary to section 88A) as follows.

(2) In the definition of “collective investment scheme” for “75 of the Financial Services Act 1986” substitute “235 of the Financial Services and Markets Act 2000”.

(3) For the definition of “insurance business” substitute—

“insurance business” means business which consists of the effecting or carrying out of contracts of insurance and, for the purposes of this definition, “contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

“the operator”, in relation to a collective investment scheme, shall be construed in accordance with section 237(2) of the Financial Services and Markets Act 2000;

(4) For the definition of “trustee” and “the operator” substitute—

“trustee”, in relation to a collective investment scheme, means a trustee or a depositary within the meaning given in section 237(2) of the Financial Services and Markets Act 2000.

(5) This Article has effect in relation to—

(a) an agreement to transfer chargeable securities which is not conditional, if the agreement is made on or after 1st December 2001;

(b) a conditional agreement to transfer such securities, if the condition is satisfied on or after that date.

Section 10 Stamp duty reserve tax: interpretation

(1) In section 99(5B) (interpretation) for the words from “In this subsection” to the end substitute “In this subsection “an authorised unit trust scheme”, “collective investment scheme” and “an open-ended investment company” have the same meanings as in Part 17 of the Financial Services and Markets Act 2000.”.

(2) This Article has effect in relation to—

(a) an agreement to transfer chargeable securities which is not conditional, if the agreement is made on or after 1st December 2001;

(b) a conditional agreement to transfer such securities, if the condition is satisfied on or after that date.

Section 11 Inheritance tax: power to amend definitions of “market maker”

In sections 106(4)(a) and 107(4)(a) (power to amend sections 105(7) and 234(4) of the Inheritance Tax Act 1984) for “of the Financial Services Act 1986” substitute “given by section 285(1)(a) of the Financial Services and Markets Act 2000”.

Section 12 Power to modify section 21 of the Taxes Management Act 1970: definition of recognised investment exchange

In paragraph 10(2) of Schedule 18 (definition of recognised investment exchange) for “of the Financial Services Act 1986” substitute “given by section 285(1)(a) of the Financial Services and Markets Act 2000”.

Section 13 Introduction

Amend the Income and Corporation Taxes Act 1988 in accordance with Articles 14 to 52.

Section 14 Transfers of insurance business

(1) Amend section 12 (basis of, and periods for, assessment) , as follows.

(2) In subsection (7A) for the words from “there” to “1982” substitute “an insurance business transfer scheme has effect to transfer from a company to another person business which consists of the effecting or carrying out of contracts of long-term insurance”.

(3) After subsection (7A) insert—

(7B) In subsection (7A) above—

“contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and

“insurance business transfer scheme” means a scheme falling within section 105 of the Financial Services and Markets Act 2000 and—

includes an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section, but

does not include a scheme for the transfer of business carried on by one or members or former underwriting members of Lloyd's.

(4) This Article has effect in relation to any transfer under a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section.

Section 15 Insurance business: application of sections 43A to 43E of the Taxes Act

(1) In section 43F(1) (insurance business) for “Part II of the Insurance Companies Act 1982 ” substitute “Chapter 9 of the Prudential Sourcebook (Insurers)”.

(2) This Article has effect in relation to periods of account ending on or after 1st December 2001.

Section 16 Tax treatment of levies and repayments

(1) Omit section 76(7) and (7A) (expenses of management: insurance companies) .

(2) Amend section 76A (levies and repayments under the Financial Services and Markets Act 2000) in accordance with paragraphs (3) to (5) below.

(3) For subsection (2) substitute—

(2) “Levy” means—

(a) a payment required under rules made under section 136(2) of the Financial Services and Markets Act 2000 (“the Act of 2000”);

(b) a levy imposed under the Financial Services Compensation Scheme;

(c) a payment required under rules made under section 234 of the Act of 2000;

(d) a payment required under scheme rules in accordance with paragraph 15(1) of Schedule 17 to the Act of 2000;

(e) a payment required in accordance with the standard terms fixed under paragraph 18 of Schedule 17 to the Act of 2000 other than an award which is not an award of costs under cost rules.

(4) For subsection (3) substitute—

(3) “Repayment provision” means—

(a) any provision made by virtue of section 136(7) or 214(1)(e) of the Act of 2000;

(b) any provision by scheme rules for fees to be refunded in specified circumstances.

(5) After subsection (4) add—

(5) “Scheme rules” means the rules referred to in paragraph 14(1) of Schedule 17 to the Act of 2000.

(6) “Costs rules” means—

(a) rules made under section 230 of the Act of 2000;

(b) provision relating to costs contained in the standard terms fixed under paragraph 18 of Schedule 17 to the Act of 2000.

(6) Amend section 76B (levies and repayments under the Financial Services and Markets Act 2000: investment companies) in accordance with paragraphs (7) and (8) below.

(7) In subsection (3) for “76(7A)” substitute “76A(2)”.

(8) For subsection (4) substitute—

(4) “Costs rules” has the meaning given in section 76A(6).

Section 17 PAYE : readily convertible assets

(1) Amend section 203F (PAYE: readily convertible assets) as follows.

(2) In subsection (2)(a) for “of the Financial Services Act 1986” substitute “given by section 285(1)(a) of the Financial Services and Markets Act 2000”.

(3) In subsection (5) for the words from “right” to the end substitute “investment of a kind specified in Part III of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.”.

Section 18 Relief on life assurance premiums

(1) Amend section 266 (relief on life assurance premiums) as follows.

(2) In subsection (2)(a) for sub-paragraphs (i) to (iii) substitute—

(i) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 or under paragraph 15 of Schedule 3 to that Act (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of long-term insurance; or

(ii) a member of the Society who effects or carries out contracts of long-term insurance in accordance with Part 19 of the Financial Services and Markets Act 2000;

(3) After subsection (13) add—

(14) In subsection (2)(a)—

“contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and

“member of the society” has the same meaning as in Lloyd’s Act 1982 .

Section 19 Interest under contractual savings schemes

(1) Amend section 326 (interest etc. under contractual savings schemes) as follows.

(2) In subsections (1)(c), (2), (4) and (6)(a) for “an institution authorised under the Banking Act 1987” substitute “a person falling within section 840A(1)(b) ”.

(3) In subsections (7)(a) and (8)(a) after “society” insert “, person”.

Section 20 Tax-exempt special savings accounts

(1) Amend section 326A (tax-exempt special savings accounts) in accordance with paragraphs (2) to (5) below.

(2) In subsection (4) for the words “an institution authorised under the Banking Act 1987” substitute “a person falling within section 840A(1)(b)”.

(3) In subsection (5) after “society” insert “, person”.

(4) In subsection (9) after “society” insert “, person”.

(5) For subsection (10) substitute—

(10) In this section “relevant European institution” means an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to accept deposits.

(6) In section 326B(3) (loss of exemption for special savings accounts) after “society” insert “, person”.

(7) In section 326C(1) (power of Board to make supplementary regulations in relation to tax-exempt special savings accounts) —

(a) in paragraphs (b), (c) and (cd) after “and other” insert “persons and”;

(b) in paragraphs (cc) and (d) after “building society” insert “, person”.

Section 21 Personal equity plans: tax representatives

(1) Amend section 333A (personal equity plans: tax representatives) as follows.

(2) In subsection (11) for paragraph (a) substitute—

(a) “European institution” means an EEA firm of the kind mentioned in paragraph 5(a), (b) or (c) of Schedule 3 to the Financial Services and Markets Act 2000 which is an authorised person for the purposes of that Act as a result of qualifying for authorisation under paragraph 12 of that Schedule;

(3) In subsection (12) for the words from “a person” to the end substitute “ a firm which is an authorised person for the purposes of the Financial Services and Markets Act 2000 as a result of qualifying for authorisation under paragraph 2 of Schedule 4 to that Act.”.

Section 22 Involvement of insurance companies with plans and accounts

In section 333B(9) (involvement of insurance companies with plans and accounts) for the definition of “insurance company” substitute—

“insurance company” means an undertaking carrying on the business of effecting or carrying out contracts of insurance and, for the purposes of this definition, “contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

Section 23 Mortgage interest relief: qualifying lenders

(1) Amend section 376 (qualifying borrowers and qualifying lenders) as follows.

(2) In subsection (4)—

(a) for paragraph (e) substitute—

(e) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance;

(b) omit paragraph (g);

(c) for paragraph (p) substitute—

(p) any body which is for the time being registered under section 376A.

(3) Omit subsection (4A).

Section 24 Mortgage interest relief: register of qualifying lenders

In section 376A (the register of qualifying lenders) after subsection (1) insert—

(1A) The following are entitled to be registered—

(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000—

(i) to accept deposits; or

(ii) to effect or carry out contracts of general insurance;

(b) a 90 per cent subsidiary of a person mentioned in—

(i) section 376(4)(e); or

(ii) paragraph (a) above;

(c) any other body whose activities and objects appear to the Board to qualify it for registration.

Section 25 Mortgage interest relief: interpretation

In section 379 (interpretation of sections 369 to 378) before the definition of “prescribed” insert—

“contracts of general insurance” means contracts which fall within Part I of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contracts of long-term insurance” means contracts which fall within Part II of that Schedule;

Section 26 Interpretative provisions relating to insurance companies

(1) Amend section 431(2) (interpretative provisions relating to insurance companies) as follows.

(2) After the definition of “closing liabilities” insert—

“contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contract of long-term insurance” means any contract which falls within Part II of Schedule 1 to that Order;

(3) For the definition of “insurance company” substitute—

“insurance business transfer scheme” means a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section;

“insurance company” means—

a person (other than a friendly society) who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance, or

an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act or a firm qualifying for authorisation under Schedule 4 to that Act which—

carries on business which consists of the effecting or carrying out of contracts of insurance, and

carries on that business through a branch or agency in the United Kingdom;

(4) In the definition of “liabilities” for the words from “liabilities of” to the end substitute “long-term liabilities of the company determined for the purposes of the company’s periodical return on actuarial principles in accordance with section 5.6 of the Prudential Sourcebook (Insurers) (excluding any that have been reinsured);”.

(5) For the definition of “long term business” substitute—

“long-term business” means business which consists of the effecting or carrying out of contracts of long-term insurance;

(6) After the definition of “long term business fund” insert—

“long-term liabilities” means liabilities of an insurance company arising under or in connection with contracts for long-term business (including liabilities arising from deposit back arrangements within the meaning given by section 11.1 of the Prudential Sourcebook (Insurers));

(7) In the definition of “periodical return” for “Treasury under Part II of the Insurance Companies Act 1982” substitute “Financial Services Authority under section 9.6 of the Prudential Sourcebook (Insurers)”.

(8) After the definition of “periodical return” insert—

“the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000 ;

(9) The amendments made by paragraphs (3), (6) and (7) above have effect in relation to periods of account ending on or after 1st December 2001.

Section 27 Power to amend the Tax Acts so far as relating to insurance companies

In section 431A (power of Treasury to amend provisions of the Tax Acts relating to insurance companies) for the “Insurance Companies Act 1982” substitute “Financial Services and Markets Act 2000, in so far as that Act relates to insurance companies,”.

Section 28 Transfer of assets etc.

(1) In section 440(2) (transfer of assets of insurance company) for paragraph (a) substitute—

(a) an asset is acquired by a company as a result of an insurance business transfer scheme which has effect to transfer long-term business from any person (“the transferor”) to the company, and

(2) This Article has effect in relation to any transfer under a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section.

Section 29 Effect of transfer of insurance business

(1) In section 444A (effect of transfer of long-term insurance business) for subsection (1) substitute—

(1) Subject to subsection (7) below, 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) This Article has effect in relation to any transfer under a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section.

Section 30 Equalisation reserves

(1) Except as provided in paragraph (4) below, in sections 444BA to 444BD (equalisation reserves) for “section 34A regulations” in each place where it occurs substitute “equalisation reserve rules”.

(2) Amend section 444BA in accordance with paragraphs (3) and (4) below.

(3) In subsection (10) for “the regulations” substitute “the rules”.

(4) For subsection (11) substitute—

(11) In this section, and in sections 444BB to 444BD, “equalisation reserves rules” means the rules in Chapter 6 of the Prudential Sourcebook (Insurers).

(5) In section 444BC(1) for “17 of the Insurance Companies Act 1982” substitute “9.3 of the Prudential Sourcebook (Insurers)”.

(6) Amend section 444BD in accordance with paragraphs (7) and (8) below.

(7) In subsection (2)(a) for sub-paragraphs (i) and (ii) substitute—

(i) by an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or

(ii) by a firm which has permission under paragraph 4 of Schedule 4 to that Act (as a result of qualifying for authorisation under paragraph 2 of that Schedule) to effect or carry out contracts of insurance in the United Kingdom, or

(iii) in respect of any business which consists of the effecting or carrying out of contracts of insurance and which is carried on outside the United Kingdom by a company resident in the United Kingdom;

(8) In subsection (7)—

(a) for the definition of “credit insurance business” substitute—

“credit insurance business” means business which consists of the effecting or carrying out of contracts of insurance against risks of loss to the persons insured arising from—

the insolvency of debtors of theirs, or

from the failure (otherwise than through insolvency) of debtors of theirs to pay their debts when due;

(b) omit the definition of “ EC company” and the word “and” immediately before it.

(9) This Article has effect in relation to periods of account ending on or after 1st December 2001.

Section 31 Capital redemption business

In section 458(3) (capital redemption business) for paragraphs (a) and (b) substitute—

(a) consists of the effecting on the basis of actuarial calculations, and the carrying out, of contracts of insurance under which, in return for one or more fixed payments, a sum or series of sums of a specified amount become payable at a future time or over a period; and

(b) is not life assurance business.

Section 32 Friendly societies: exemption from tax in respect of life or endowment business

(1) Amend section 460 (friendly societies: exemption from tax in respect of life or endowment business) as follows.

(2) In subsection (10A) for the words from the beginning to “1982” substitute “Where at any time an insurance business transfer scheme has effect to transfer to a friendly society long-term business,”.

(3) After subsection (10A) insert—

(10B) In subsection (10A) “insurance business transfer scheme” means a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section.

(4) In subsection (11)—

(a) omit “by virtue of section 84 of the Friendly Societies Act 1974 or”;

(b) for “either of those Acts” substitute “that Act”.

(5) The amendments made by paragraphs (2) and (3) above have effect in relation to any scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section.

Section 33 Taxation in respect of other business

(1) Amend section 461 (taxation in respect of other business) as follows.

(2) In subsection (2)—

(a) in paragraphs (a) and (b) for “registrar” substitute “Board”;

(b) for “(8)” substitute “(7)”.

(3) In subsection (4)(a)—

(a) omit “by virtue of section 84 of the Friendly Societies Act 1974 or”;

(b) for “either of those Acts” substitute “that Act”.

(4) In subsection (6)—

(a) in paragraphs (a) and (b) for “the Commission” substitute “the Board”;

(b) for the words immediately after paragraph (b) substitute “the Board may give a direction to the society under subsection (7) below.”.

(5) For subsections (7) to (9) substitute—

(7) A direction under this subsection is that (and has the effect that) the society to which it is given is to be treated for the purposes of this Act as a society registered after 31st May 1973 with respect to business carried on after the date of the direction.

(8) A society to which a direction is given may, within 30 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 subsection (6)(a) above; or

(b) the direction is not necessary for the protection of the revenue.

(9) If a registered friendly society in respect of which a direction is in force under subsection (7) above becomes an incorporated friendly society, the direction shall continue to have effect, so that the incorporated friendly society shall be treated for the purposes of this Act as a society registered after 31st May 1973.

(6) After subsection (10) add—

(11) For the purposes of this section and section 461C—

(a) any group of persons which was approved for the purposes of this section (as mentioned in subsection (2)(a) above) immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date;

(b) any greater amount which was authorised for the purposes of this section (as mentioned in subsection (2)(b) above) immediately before 1st December 2001 shall be treated as having been authorised for the purposes of this section by the Board on that date; and

(c) where a direction that subsection (2) above applies to a society was in force immediately before 1st December 2001, a direction in relation to that society shall be treated as having been made under subsection (7) above by the Board on that date.

Section 34 Taxation in respect of other business: incorporated friendly societies qualifying for exemption

(1) Amend section 461A (taxation in respect of other business: incorporated friendly societies qualifying for exemption) as follows.

(2) In subsection (2) for “Friendly Societies Commission” substitute “Board”.

(3) After subsection (3) add—

(4) For the purposes of this section and section 461C, any group of persons which was approved for the purposes of this section (as mentioned in subsection (2) above) by the Friendly Societies Commission immediately before 1st December 2001 shall be treated as having been approved for the purposes of this section by the Board on that date.

Section 35 Taxation in respect of other business: incorporated friendly societies etc.

In section 461B(4)(b) (taxation in respect of other business: incorporated friendly societies etc.) for “(8)” substitute “(7)”.

Section 36 Taxation in respect of other business: withdrawal of “qualifying” status from incorporated friendly society

(1) Amend section 461C (taxation in respect of other business: withdrawal of “qualifying” status from incorporated friendly society) as follows.

(2) In subsection (1)—

(a) for “to (5)” substitute “and (4)”;

(b) in paragraph (b) for “Friendly Societies Commission” substitute “Board”.

(3) In subsection (2)—

(a) for “to (5)” substitute “and (4)”;

(b) in paragraph (a) for “Friendly Societies Commission” substitute “Board”.

(4) In subsection (3)—

(a) for “Commission” in the first two places where it occurs substitute “Board”;

(b) for the words from “serve a notice” to the end substitute “give a direction to the society under subsection (4) below.”.

(5) For subsections (4) to (7) substitute—

(4) A direction under this subsection is that (and has the effect that) the society to which it is given shall cease to be a qualifying society as from the date of the direction.

(5) A society to which a direction is given may, within 30 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 subsection (1) above;

(b) subsections (3) and (4) above do not apply to it by reason of subsection (2) above; or

(c) the direction is not necessary for the protection of the revenue.

Section 37 Interpretation of Chapter 2 of Part 12

In section 466(1) (interpretation of Chapter 2) —

(a) in paragraph (a) for the words from “within Class I” to the end substitute “of effecting or carrying out contracts of insurance which fall within paragraphs I, II or III of Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;”;

(b) in paragraph (d)—

(i) for “Class IV of Head A” substitute “paragraph IV of Part II”;

(ii) in sub-paragraph (ii) for “Class I, II or III of Head A” substitute “paragraphs I, II or III of Part II”.

Section 38 Authorised unit trusts: interest distributions

(1) Amend section 468L (interest distributions) as follows.

(2) In subsection (12C)—

(a) in the definition of “collective investment scheme” for “75 of the Financial Services Act 1986” substitute “235 of the Financial Services and Markets Act 2000”;

(b) in the definition of “open-ended investment company” for “75(8) of the Financial Services Act 1986” substitute “236 of the Financial Services and Markets Act 2000”.

(3) In subsection (12F)—

(a) in paragraph (a) for “75(8) of the Financial Services Act 1986” substitute “236 of the Financial Services and Markets Act 2000”;

(b) in paragraph (c) for “75(3)(a)” substitute “235(3)(a)”.

Section 39 Interest payments: meaning of deposit-taker

(1) Amend section 481 (meaning of deposit-taker etc.) as follows.

(2) In subsection (2) for paragraph (b) substitute—

(b) any person falling within section 840A(1)(b) whose permission under Part 4 of the Financial Services and Markets Act 2000 includes permission to accept deposits which are relevant deposits;

(ba) any company within the meaning of the Companies Act 1985 —

(i) in respect of which a resolution has been passed by a local authority under section 48(3) of the Banking Act 1979 or section 103(3) of the Banking Act 1987; and

(ii) which is exempt from the prohibition imposed by section 19 of the Financial Services and Markets Act 2000 in relation to the acceptance of deposits which are relevant deposits;

(3) Omit subsection (5)(g).

Section 40 Gifts of shares and securities to charities etc.

In section 587B(9) (gifts of shares and securities to charities etc.) in the definition of “offshore fund” for “of the Financial Services Act 1986” substitute “given by section 235 of the Financial Services and Markets Act 2000”.

Section 41 Establishment of schemes

(1) Amend section 632 (establishment of schemes) as follows.

(2) In subsection (1)(a) for the words from “is authorised” to the end substitute “has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance or to manage unit trust schemes authorised under section 243 of that Act;”.

(3) In subsection (1) for paragraph (aa) substitute—

(aa) an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000 which—

(i) has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of long-term insurance; and

(ii) fulfils any one of the requirements under subsections (5), (6) or (7) of section 659B ;

(ab) a firm which has permission under paragraph 4 of Schedule 4 to the Financial Services and Markets Act 2000 (as a result of qualifying for authorisation under paragraph 2 of that Schedule) to manage unit trust schemes authorised under section 243 of that Act;

(ac) a person who qualifies for authorisation under Schedule 5 to the Financial Services and Markets Act 2000;

(4) Omit subsection (1)(bb).

(5) In subsection (1) for paragraph (c) substitute—

(c) a person falling within section 840A(1)(b);

(6) In subsection (1)(cc)—

(a) for “an institution authorised under the Banking Act 1987” substitute “a person falling within section 840A(1)(b)”;

(b) for “such an institution” substitute “such a person”.

(7) Omit subsection (1)(d).

(8) In subsection (1)(e) for sub-paragraphs (i) and (ii) substitute—

(i) is an EEA firm of the kind mentioned in paragraph 5(a), (b) or (c) of Schedule 3 to the Financial Services and Markets Act 2000,

(ii) qualifies for authorisation under paragraph 12(1) or (2) of that Schedule, and

(iii) has permission under that Act to manage portfolios of investments.

(9) For subsection (2) and (2ZA) substitute—

(2) In subsection (1)(a) above “contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

(10) Omit subsection (2B).

Section 42 Pension schemes etc.: meaning of insurance company

(1) Amend section 659B (definition of insurance company) as follows.

(2) For subsection (1) substitute—

(1) in sections 591(2)(g) and 599(7) “insurance company” means one of the following—

(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance;

(b) an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act which—

(i) has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of long-term insurance; and

(ii) fulfils the requirement under subsection (5), (6) or (7) below.

(1A) In subsection (1) above “contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

(3) Omit subsections (3), (4) and (10).

Section 43 Power to modify section 735 to take account of recognised investment exchanges

In section 738(5) (power to modify section 735 to take account of recognised investment exchanges) for “means a recognised investment exchange within the meaning of the Financial Services Act 1986” substitute “has the meaning given by section 285(1)(a) of the Financial Services and Markets Act 2000”.

Section 44 Amendment of return where general insurance business of foreign company accounted for on a non-annual basis

In section 755B (meaning of general insurance business) for subsection (6) substitute—

(6) In this section “general insurance business” means business which consists of the effecting or carrying out of contracts which fall within Part I of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

Section 45 Material interests in offshore funds

In section 759(1A) (meaning of collective investment scheme) for “same meaning as in the Financial Services Act 1986” substitute “meaning given by section 235 of the Financial Services and Markets Act 2000”.

Section 46 Interpretation: meaning of “bank”

(1) Amend section 840A (meaning of bank) as follows.

(2) In subsection (1) for paragraphs (b) and (c) substitute—

(b) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits other than—

(i) a building society within the meaning of the Building Societies Act 1986,

(ii) a friendly society within the meaning of section 116 of the Friendly Societies Act 1992 ,

(iii) a society registered as a credit union under the Industrial and Provident Societies Act 1965 or the Credit Unions (Northern Ireland) Order 1985 , or

(iv) an insurance company within the meaning of section 659B(1);

(c) an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to accept deposits;

(3) Omit subsection (2).

Section 47 Qualifying policies

(1) Amend Schedule 15 (qualifying policies) as follows.

(2) In paragraph 4(3)(b)(i) for “business within class VI of Head A or class I of Head B of Schedule 2 to the Friendly Societies Act 1992” substitute “the business of effecting or carrying out contracts of insurance which fall within paragraph 1 of Part I or paragraph VI of Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001”.

(3) In paragraph 11(1) for the words from “a contract falling” to the end substitute

a contract of insurance on human life; or

a contract to pay annuities on human life.

(4) In paragraph 14(3) for the words from “effected” to “1982” substitute “evidencing a contract of long-term insurance”.

(5) In paragraph 14 after sub-paragraph (3) insert—

(3A) In sub-paragraph (3) “contract of long-term insurance” means a contract which falls within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

Section 48 Contractual savings schemes: relevant European institutions

In paragraph 3 of Schedule 15A (contractual savings schemes: relevant European institutions) for the words from “an institution which” to the end substitute “an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to the Financial Services and Markets Act 2000 which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to accept deposits.”.

Section 49 Overseas life insurance companies

(1) Amend Schedule 19AC (modifications of Act in application to overseas life insurance companies) as follows.

(2) In sub-paragraph (1) of paragraph 4 in section 11B(5) treated as inserted by that sub-paragraph—

(a) in paragraph (b) for “39 of the Insurance Companies Act 1982” to the end substitute “43 of the Financial Services and Markets Act 2000 other than an asset not treated as so maintained under that requirement;”;

(b) in paragraph (c) for the words “by virtue of” to the end substitute “under that requirement;”;

(c) in paragraph (d) for “an order under section 68 of the Insurance Companies Act 1982” substitute “a direction under section 148 of the Financial Services and Markets Act 2000”.

(3) In paragraph 4A—

(a) in sub-paragraph (1) for the words from “a transfer” to “1982” substitute “an insurance business transfer scheme”;

(b) in sub-paragraph (2) for “long term insurance” substitute “life insurance”;

(c) for sub-paragraph (3) substitute—

(3) In sub-paragraph (2) above, “the third life insurance directive” means the Council Directive of 10th November 1992 on the co-ordination of laws, regulations and administrative provisions relating to direct life assurance and amending Directives 79/267/ EEC and 90/619/EEC ( No. 92/96/EEC ) .

(4) In paragraphs 10AA and 11C for the words from “a transfer” to “1982” substitute “an insurance business transfer scheme”.

(5) The amendments made by paragraph (2) above have effect for the purposes of determining whether an asset is a qualifying asset at any time on or after 1st December 2001.

Section 50 Charities: qualifying investments

In paragraph 6 of Schedule 20 (qualifying investments) for “of the Financial Services Act 1986” substitute “given by section 237(1) of the Financial Services and Markets Act 2000”.