(1) Amend Schedule 19ABA to the Income and Corporation Taxes Act 1988 (modifications of life assurance provisions of the Corporation Tax Acts in relation to BLAGAB group reinsurers) as follows.
(2) For paragraph 8 (modification of section 444AA (transfers of business: deemed periodic return)) substitute—
(8) In section 444AA (transfers of business: deemed periodical returns) in subsection (5) for paragraphs (a) and (b) substitute—
(a) in respect of the amount of the relevant long-term business provisions immediately before the transfer, and
(b) in respect of the value, immediately before the transfer, of the assets transferred.
(3) After paragraph 8 insert—
Modification of section 444ABA (relevant non-transferred assets)
(8A) In section 444ABA (relevant non-transferred assets) in subsection (1) for the definition of BTO substitute—
BTO is the lesser of VA and APL, where—
VA is the value of the assets transferred by the insurance business transfer scheme shown (or treated as shown) in the periodical return of the transferor for the period of account of the transferor including the transfer date, and
APL is the amount of the profit or loss for the financial year shown in the balance sheet in the periodical return for the last period of account of the transferor ending before the transfer date, together with—
in the case of IAD accounts, the amount of profit or loss shown as being brought forward in that balance sheet, and
in the case of IAS accounts, the amount of retained earnings shown as being brought forward in that balance sheet.
Modification of section 444ABB (retained assets)
(8B)
(1) Modify section 444ABB (retained assets) as follows.
(2) In subsection (1)—
(a) for “RL13” (in both places) substitute “RL”, and
(b) in the definition of RL13 for “AL13” substitute “APL”.
(3) In subsection (1A) for paragraphs (a) to (c) substitute—
(a) APL is the amount of the profit or loss for the financial year shown in the balance sheet in the periodical return for the last period of account of the transferor ending before the transfer date, together with—
(i) in the case of IAD accounts, the amount of profit or loss shown as brought forward in that balance sheet, and
(ii) in the case of IAS accounts, the amount of retained earnings shown as brought forward in that balance sheet;
(b) VE is the amount (if any) by which VA exceeds VTL where—
(i) VA is the value of the assets transferred by the insurance business transfer scheme shown (or treated as shown) in the periodical return of the transferor for the period of account of the transferor including the transfer date, and
(ii) VTL is the value of the liabilities transferred by the insurance business transfer scheme (but excluding those which arise from deposit back arrangements); and
(c) relevant retained liabilities are any liabilities of the company’s long-term business which are owed by the company immediately after the transfer date and are shown (or treated as shown)—
(i) at items C3 (net of reinsurance) and G in IAD accounts, or
(ii) at equivalent items in the balance sheet in IAS accounts.
Modification of section 444ABD (transferor’s period of account including transfer)
(8C)
(1) Modify section 444ABD (transferor’s period of account including transfer) as follows.
(2) In subsection (1) for paragraphs (a) and (b) substitute—
(a) the value of the liabilities transferred by the insurance business transfer scheme (but excluding those which arise from deposit back arrangements), exceeds
(b) the value, immediately before the transfer, of the assets transferred by the insurance business transfer scheme,
(3) In subsection (1E) for “amount” (in the first place) substitute “value”.
Modification of section 444AC (transfer schemes: reduction of income of transferee)
(8D)
(1) Modify section 444AC (transfer schemes: reduction of income of transferee) as follows.
(2) In subsection (4) for the words from “lesser of” to the end substitute—
the amount of the profit or loss for the financial year shown in the balance sheet in the periodical return for the last period of account of the transferor ending before the transfer date, together with—
(a) in the case of IAD accounts, the amount of profit or loss shown as being brought forward in that balance sheet, and
(b) in the case of IAS accounts, the amount of retained earnings shown as being brought forward in that balance sheet.
(3) Omit subsection (5).
Modification of section 444AE (transfers of business: FAFTS)
(8E)
(1) In a case where the transferor or the transferee is a BLAGAB group reinsurer (or both are), omit section 444AE (transfers of business: FAFTS) .
Modification of section 444AEA (transfer schemes: anti-avoidance rule)
(8F) In section 444AEA (transfer schemes: anti-avoidance rule) , in subsection (6), in the definition of “surplus-increasing transfer of assets”, for “increases the amount of total surplus shown in line 39 of Form 58” substitute “gives rise to an amount that increases the profits or reduces the losses shown”.
(4) After paragraph 20 (modification of section 83YB (meaning of “appropriate line 51” amount for purposes of section 83YA) insert—
Modification of section 83YC to 83YF (financing-arrangement-funded transfers)
(20A) Omit sections 83YC to 83YF (financing-arrangement-funded transfers) .
