Legalize / United Kingdom / Public General Act

Finance Act 2007

Type Public General Act

Publication 2007-07-19

Last updated 2025-04-24

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

“post-commencement rental” means—any amount receivable on or after 6th December 2006 in respect of any period beginning on or after that date, orthe appropriate fraction of any amount receivable on or after that date in respect of any period beginning before, and ending on or after, that date,but does not include any amount received before that date.

(7) For this purpose the “appropriate fraction”, in relation to any amount received in respect of any period, means the fraction—

$$PCPWP$where—“PCP” means the number of days in the part of the period falling on or after 6th December 2006, and“WP” means the number of days in the whole of the period.$

(8) Sub-paragraph (9) applies if the amounts that, in accordance with section 228D of CAA 2001 as applied by section 228F of that Act, fall to be taken into account in calculating for tax purposes the income or profits for any post-commencement period of account comprise both post-commencement rentals and other amounts.

(9) For the purposes of section 228D of CAA 2001 as applied by section 228F of that Act, the amount of the gross earnings is taken to be so much of the gross earnings as, on a just and reasonable basis, relates to those other amounts.

Derivative contracts: contracts treated for accounting purposes as financial asset or liability

18

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Derivative contracts: transfers of value to connected companies

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SCHEDULE 6

Company reconstructions without change of ownership

1

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Sale etc of lessor companies etc

2

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SCHEDULE 7

Part 1 — Amendments

Taxes Management Act 1970 (c. 9)

1

In section 98 of TMA 1970 (special returns etc), in the Table, omit the entries relating to section 333B of ICTA.

Income and Corporation Taxes Act 1988 (c. 1)

2

ICTA is amended as follows.

3

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4

Omit section 333B (involvement of insurance companies with plans and accounts).

5

In section 403E (relief for overseas losses of UK resident companies), omit subsection (3).

6

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7

In section 431A(3)(a) (power to amend), omit “and Schedule 19AA”.

8

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9

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10

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11

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14

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15

In section 432AB (losses from Schedule A business or overseas property business), omit subsection (6).

16

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17

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18

Omit section 432D (section 432B apportionment: value of non-participating funds).

19

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20

In section 432F(2) (section 432B apportionment: supplementary provisions)—

(a) omit “For each category of business in relation to which section 432E falls to be applied”, and

(b) omit “, after making any reduction required by section 432E(5),”.

21

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22

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23

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24

Omit section 436 (pension business: separate charge on profits).

25

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26

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27

Omit section 438B (income or gains arising from property investment LLP).

28

Omit section 438C (determination of policy holders' share for purposes of s.438B).

29

Omit section 439 (restricted government securities).

30

Omit section 439B (life reinsurance business: separate charge on profits).

31

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32

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33

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34

Omit section 441 (overseas life assurance business).

35

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36

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38

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39

Omit sections 458 and 458A (capital redemption business).

40

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41

In section 461 (registered friendly societies: other business), omit subsection (3A).

42

In section 461B (incorporated friendly societies), omit subsection (2A).

43

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44

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45

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46

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47

(1) Section 755A (treatment of chargeable profits and creditable tax apportioned to company carrying on life assurance business) is amended as follows.

(2) In subsection (4), for the words after “referable to” substitute “ gross roll-up business carried on by the UK company. ”

(3) In subsection (6)(c), for “a category of business specified in paragraphs (a) to (c) of subsection (4) above” substitute “ gross roll-up business ”.

(4) In subsection (13), for paragraphs (a) to (d) substitute—

(a) basic life assurance and general annuity business, or (ba) gross roll-up business,

48

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49

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50

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51

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52

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53

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54

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55

Omit Schedule 19AA (overseas life assurance fund).

56

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Finance Act 1989 (c. 26)

57

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58

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59

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Taxation of Chargeable Gains Act 1992 (c. 12)

60

TCGA 1992 is amended as follows.

61

In section 204(10) (policies of insurance and non-deferred annuities)—

(a) for “as defined in section 458(3)” substitute “ within the meaning of Chapter 1 of Part 12 ”, and

(b) omit “other”.

62

In section 210B—

(a) omit paragraph (b) of subsection (6) and the word “or” before it, and

(b) in subsection (8) (disposal and acquisition of section 440A securities), in the definition of “chargeable section 440A holding”, for “(2)(a)(iii)” substitute “ (2)(a)(i) ”.

63

In section 212(2) (annual deemed disposal of holdings of certain assets), for the words from “pension business” to the end substitute “ gross roll-up business ”.

64

In section 213(1A) (spreading of gains and losses under section 212), omit the words following “general annuity business”.

Finance Act 1996 (c. 8)

65

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66

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67

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Capital Allowances Act 2001 (c. 2)

68

CAA 2001 is amended as follows.

69

(1) Section 255 (apportionment of allowances and charges) is amended as follows.

(2) For subsections (1) and (1A) substitute—

(1) Except where subsection (3) applies, any allowance to which the company is entitled, and any charge to which it is liable, for a chargeable period in respect of a management asset must be apportioned between basic life assurance and general annuity business, gross roll-up business and PHI business in accordance with subsections (1A) and (1B). (1A) The allowance or charge is to be apportioned to a category of business using the formula— $$A×BC$where—A is the amount of the allowance or charge,B is the mean of the opening and closing liabilities of that category of business, andC is the mean of the opening and closing liabilities of all the categories of business mentioned in subsection (1) which are carried on by the company.$ (1B) If C is nil or below nil, the allowance or charge to be apportioned to a category of business is such as is just and reasonable.

(3) Omit subsection (2).

(4) In subsection (3)—

(a) in paragraph (a), for “section 441 of ICTA in respect of its overseas life assurance business” substitute “ section 436A of ICTA (gross roll-up business) ”, and

(b) in paragraph (b), for “provided outside the United Kingdom for use for the management of that business” substitute “ held for the purposes of a permanent establishment outside the United Kingdom at or through which the company carries on gross roll-up business ”.

70

(1) Section 256 (different giving effect rules for different categories of business) is amended as follows.

(2) In subsection (3), for paragraphs (a) to (c) substitute “ section 436A of ICTA (gross roll-up business) ”.

(3) In subsection (4)—

(a) for “profit” substitute “ profits ”,

(b) in paragraph (a), for “any particular category of business” substitute “ gross roll-up business ” and for “that category of business” substitute “ its gross roll-up business ”, and

(c) in paragraph (b), for “any particular category of business” substitute “ gross roll-up business ” and for “that category of business” substitute “ its gross roll-up business ”.

71

(1) Section 545 (investment assets) is amended as follows.

(2) In subsection (3), in the second sentence, for “sections 432ZA to 432E, or section 438B,” substitute “ section 432A ”.

(3) In subsection (5)—

(a) for the words from “under—” to “no allowance” substitute “ under section 436A of ICTA (gross roll-up business), no allowance ”, and

(b) for “the category of life assurance business in question” substitute “ gross roll-up business ”.

Finance Act 2001 (c. 9)

72

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Finance Act 2002 (c. 23)

73

FA 2002 is amended as follows.

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75

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Income Tax (Trading and Other Income) Act 2005 (c. 5)

76

ITTOIA 2005 is amended as follows.

77

In section 473(2) (policies and contracts to which Chapter 9 applies), in the definition of “capital redemption policy”, for “as defined in section 458(3)” substitute “ within the meaning of Chapter 1 of Part 12 ”.

78

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79

In Schedule 2 (transitionals and savings etc), in paragraph 118(2), for “from “other than” onwards in the definition of “annuity business”” substitute “ following paragraph (b) in the definition of “life assurance business” ”.

Part 2 — Transitional provisions

Introduction

80

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Carry forward of unused pension business losses

81

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Carry forward of unused non-pension business losses

82

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83

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“Section 432F(2) excesses”

84

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SCHEDULE 8

Part 1 — Amendments

Income and Corporation Taxes Act 1988 (c. 1)

1

ICTA is amended as follows.

2

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3

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4

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5

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6

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7

Omit section 439A (taxation of pure reinsurance business).

8

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9

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10

In section 755A(2) and (6)(a) (controlled foreign companies: apportionments to companies carrying on life assurance business), for “not charged to tax under Case I of Schedule D in respect of its profits from” substitute “ charged to tax under the I minus E basis in respect of ”.

Finance Act 1989 (c. 26)

11

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12

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13

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14

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15

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16

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Finance Act 1991 (c. 31)

17

In paragraph 16(1) of Schedule 7 to FA 1991 (transitional relief for old general annuity contracts), for “, otherwise than in accordance with the provisions applicable to Case I of Schedule D,” substitute “ under the I minus E basis ”.

Taxation of Chargeable Gains Act 1992 (c. 12)

18

In section 212 of TCGA 1992 (annual deemed disposal of holdings of unit trusts etc), omit subsection (7A) (which applies section 440B(5) of ICTA).

Finance (No. 2) Act 1992 (c. 48)

19

In F(No.2)A 1992, omit section 65 (life assurance business: I minus E basis).

Finance Act 1996 (c. 8)

20

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Finance Act 1998 (c. 36)

21

In paragraph 84 of Schedule 18 to FA 1998 (company tax returns, assessments and related matters), for sub-paragraphs (1) to (3) substitute—

(1) This paragraph applies where amounts may be brought into charge to tax either— (a) in computing profits chargeable to tax under Case I of Schedule D, or (b) as amounts within Case III or V of that Schedule.

; and the italic heading before that paragraph accordingly becomes “ Choice between Case I and Case III or V of Schedule D ”.

Capital Allowances Act 2001 (c. 2)

22

CAA 2001 is amended as follows.

23

In section 256(1) (different giving effect rules for different categories of business), for paragraph (b) substitute—

(b) is charged to tax under the I minus E basis in respect of its life assurance business.

24

In section 257(2) (life assurance: supplementary), for paragraphs (a) and (b) substitute—

(a) section 85A(3) of the Finance Act 1989 (excess adjusted Case I profits), or (b) section 89 of that Act (policy holders' share of profits).

Finance Act 2002 (c. 23)

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26

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27

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Part 2 — Transitional provisions

Unused pre-commencement section 76(12) etc excesses

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Shifts in basis of taxation at first post-commencement accounting period

29

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SCHEDULE 9

Definition of “insurance business transfer scheme”

1

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In consequence of sub-paragraph (1), omit—

(a) the definition of “insurance business transfer scheme” in section 12(7B) of ICTA,

(b) section 444AB(11) of that Act (as originally enacted),

(d) section 460(10B) of that Act,

(e) the definition of “insurance business transfer scheme” in paragraph 12(9) of Schedule 9 to FA 1996,

(f) section 560(5)(b) of CAA 2001,

(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) In section 66 of FA 2002 (election to continue postponement of mark to market)—

(a) in subsection (4)(a), for “a transfer” substitute “ an insurance business transfer ”,

(b) in subsection (5), omit the definition of “transfer scheme”, and

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer schemes: expenses, losses etc

2

(1) Section 444A of ICTA (transfers of business: expenses, losses and section 432F(2) excesses) is amended as follows.

(2) In subsection (1), omit “Subject to subsection (7) below,”.

(3) Omit—

(a) subsection (7) (section not to apply if transfer is not for bona fide commercial reasons or forms part of avoidance scheme), and

(b) subsection (8) (clearance procedure as to non-application of subsection (7)).

Transfer schemes: deemed periodical returns

3

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) In section 213(10) of TCGA 1992, for “before the transfer” substitute “ before the relevant transfer date (within the meaning of that section) ”.

Transfer schemes: taxing the transferor

4

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Transferor’s period of account including transfer

5

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Transfer schemes: taxing the transferee

6

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Repeal of section 444AD

7

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Transfer schemes: anti-avoidance

8

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Repeal of FA s.82C

9

In FA 1989, omit section 82C (relevant financial reinsurance contracts).

Transfers: receipts to be taken into account

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Transfers and demutualisations: losses where assets added to long-term insurance fund

11

(1) FA 1989 is amended as follows.

(2) Omit—

(a) in section 83, subsections (3) to (7) and, in subsection (8), the definitions of “add”, “demutualisation” and “total reinsurance” (which relate to losses where assets added to long-term insurance fund),

(b) section 83AA (amounts added to long-term insurance fund in excess of loss), and

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

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Transfer schemes: old annuity contracts

13

(1) Paragraph 16 of Schedule 7 to FA 1991 (transitional relief for old general annuity contracts) is amended as follows.

(2) In sub-paragraph (7), in the definition of “old annuity contract”, insert at the end “ (including one forming part of the business transferred to another insurance company by an insurance business transfer scheme) ”.

(3) After that sub-paragraph insert—

(8) Where— (a) business is transferred to an insurance company by an insurance business transfer scheme during an accounting period of the company, and (b) the business transferred consists of or includes old annuity contracts (“the transferred contracts”), the reference in the definition of R1 in sub-paragraph (2) above to the company's opening liabilities for the accounting period is, in relation to the transferred contracts, a reference to the company's liabilities in respect of the transferred contracts immediately after the transfer.

Transfer schemes: no gain/no loss

14

(1) TCGA 1992 is amended as follows.

(2) In section 211 (application of section 139), for subsections (2) and (2A) substitute—

(2) Where this section applies the transferor and the transferee are treated for the purposes of corporation tax on chargeable gains as if any assets included in the transfer which— (a) immediately before they are acquired by the transferee, were assets of the transferor's long-term insurance fund, and (b) immediately after they are so acquired are assets of the transferee's long-term insurance fund, were acquired for a consideration of such amount as would secure that neither a gain nor a loss would accrue to the transferor on the disposal. (3) Subsection (2) above is subject to section 212.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer schemes: old reinsurance business

15

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Power to amend transfer provisions

16

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Commencement

17

(1) The amendments made by paragraphs 1 to 3 and 13 to 15 have effect in relation to periods of account beginning on or after 1st January 2007.

(2) The amendments made by paragraphs 4, 6 to 10(5), 11 and 12 have effect in accordance with provision made by an order made by the Treasury.

(3) But the amendments made by paragraphs 11 and 12 also have effect

(a) in relation to periods of account beginning on or after 1st January 2007 where the transfer of business or demutualisation concerned took place before 21st March 2007 and

(b) in relation to periods of account ending after 30 June 2008 where the transfer of business or demutualisation concerned took place on or after 21 March 2007 and before 1 July 2008.

(4) The amendment made by paragraph 5 has effect in relation to transfers of business with a transfer date after 21st March 2007.

(4A) The amendment made by paragraph 9 has effect in relation to contracts entered into in a period of account beginning on or after 1 January 2008.

(5) The amendment made by paragraph 10(2) has effect in relation to transfers taking place on or after 6th December 2006.

(6) The amendments made by paragraph 10(3) and (4) have effect in relation to assets transferred on or after 1 January 2008.

SCHEDULE 10

Contingent loans

1

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“Structural” assets

2

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In ICTA, omit section 444ACA (transfers of business).

(3) In section 432E(2A) of that Act, omit “444ACA(2),” and paragraph (b).

(4) In section 211 of TCGA 1992 (transfers of business: application of section 139 of that Act), as amended by paragraph 14 of Schedule 9 to this Act, after subsection (2) insert—

(2A) The reference in subsection (2) above to assets included in the transfer does not include structural assets within the meaning of section 83XA of the Finance Act 1989.

(5) In paragraph 17 of Schedule 7AC to TCGA 1992 (substantial shareholdings exemption: special rules for assets of insurance company's long-term insurance fund), after sub-paragraph (4) insert—

(4A) The reference in sub-paragraph (2) to an asset of the investing company's long-term insurance fund, and the references in sub-paragraphs (3) and (4) to shares or an interest in shares held as assets of its long-term insurance fund, do not include a structural asset, or structural assets, within the meaning of section 83XA of the Finance Act 1989.

Losses on disposal of authorised investment fund assets to connected manager

3

In TCGA 1992, after section 210B insert—

(210C) (1) Section 18(3) does not apply in relation to a loss accruing on the disposal by an insurance company of authorised investment fund assets to the manager of the authorised investment fund. (2) In this section— - “authorised investment fund assets” means assets of the company's long-term insurance fund consisting of rights under an authorised unit trust or shares in an open-ended investment company, - “the manager of the authorised investment fund” means— 1. in the case of an authorised unit trust, the person who is the manager of the unit trust scheme for the purposes of Chapter 3 of Part 17 of the Financial Services and Markets Act 2000, and 2. in the case of an open-ended investment company, a director or other person having responsibility for the management of its scheme property, and - “open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.

Priority of section 83(2) of FA 1989 etc

4

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

Tidying up of TCGA 1992

5

(1) TCGA 1992 is amended as follows.

(2) In section 210B(6)(a) (disposal and acquisition of section 440A securities), for the words after “are” substitute “ assets within section 212(1). ”

(3) Omit—

(a) section 212(2A) (disapplication of section 212(1) to assets treated as representing rights under a creditor relationship),

(b) section 214 (rights under authorised unit trusts etc: transitional provisions), and

Tidying up of Chapter 2 of Part 4 of FA 1996

6

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

Correction of erroneous repeal

7

The repeals made by Schedule 3 to ITA 2007 in paragraph 11 of Schedule 6 to FA 1990 are deemed never to have had effect; but Schedule 3 to ITA 2007 is deemed to have included the repeal of the words before the paragraphs in sub-paragraph (1) of that paragraph.

Non-profit companies, non-profit funds and with-profits funds

8

(1) In section 431(2) of ICTA (interpretative provisions relating to insurance companies) insert at the appropriate place—

“non-profit company”, in relation to a period of account, means a company carrying on long-term business where, at the end of the period— (a) none of the liabilities of that business, or (b) none but an insignificant proportion of those liabilities, are with-profits liabilities;

“non-profit fund” means a fund that is not a with-profits fund;

, and

“with-profits fund” has the meaning given by the Prudential Sourcebook (Insurers);

(2) Omit—

(a) in section 432YA(5) of ICTA, the definitions of “non-profit company” and “non-profit fund”,

(b) section 82D(5) of FA 1989,

(d) in section 83A of that Act, in subsections (2)(b) and (3D)(b) “(see subsection (6))” and subsection (6).

Internal linked funds and net value

9

(1) In section 431(2) of ICTA (interpretative provisions relating to insurance companies) insert at the appropriate place—

“internal linked fund”, in relation to an insurance company, means an account— (a) to which linked assets are appropriated by the company, and (b) which may be divided into units the value of which is determined by the company by reference to the value of those assets;

, and

“net value”, in relation to any assets, means the excess of the value of the assets over the value of money debts (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) attributable to an internal linked fund which are not owed in respect of liabilities;

(2) Omit—

(a) in section 432ZA(6) of ICTA, the definition of “internal linked fund”,

(b) section 432A(9A) of that Act,

(d) paragraph 3A(6) of Schedule 11 to FA 1996.

Fair value

10

(1) In section 431(2) of ICTA (interpretative provisions relating to insurance companies) insert at the appropriate place—

“fair value”, in relation to assets, means the amount which would be obtained from an independent person purchasing them or, if the assets are money, its amount;

(2) In section 440 of ICTA (transfer of assets etc)—

(a) in subsections (1) and (2), for “market” substitute “ fair ”, and

(b) omit subsection (5).

(3) Omit—

(a) section 444AB(6) of ICTA (as originally enacted),

(b) in section 444AC(11) of that Act (as originally enacted), the words from the beginning to the end of the definition of “fair value”,

(d) in section 83(8) of FA 1989, in the definition of “fair value”, paragraph (a), and

(e) section 83YB(5) of that Act.

Generalisation of definitions

11

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

12

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

13

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

14

(1) Omit the following provisions.

(2) In ICTA—

(a) in section 12(7B), the words from the beginning to the end of the definition of “contracts of long-term insurance”,

(b) in section 76(15), “and other expressions have the same meaning as in Chapter 1 of Part 12”,

(c) in section 587B(9), “ “life assurance business” and related expressions have the same meaning as Chapter 1 of Part 12;”,

(d) in section 755A(12), the definition of “long-term insurance fund”,

(e) section 804F, and

(f) in paragraph 14(1) of Schedule 28AA, the definition of “insurance company”.

(3) In FA 1989—

(a) in section 85(2A), the second sentence,

(b) in section 89(6), the words from the beginning to “; and”, and

(4) In paragraph 16(7) of Schedule 7 to FA 1991, the words from “and, subject to that,” to the end.

(5) In TCGA 1992—

(a) section 214BA, and

(b) paragraph 17(5) of Schedule 7AC.

(6) In FA 1996—

(a) in section 87A(2), “, within the meaning of Chapter 1 of Part 12 of the Taxes Act 1988,” and “(see section 431(2) of that Act)”,

(b) section 88(7),

(c) in paragraph 12(9) of Schedule 9, the definitions of “contracts of long-term insurance” and “overseas life insurance company”,

(d) in paragraph 20(3)(b) of that Schedule, “, within the meaning of Chapter 1 of Part 12 of the Taxes Act 1988,” and “(see section 431(2) of that Act)”, and

(e) in Schedule 11, paragraph 6.

(7) In paragraph 13(3) of Schedule 18 to FA 1998, the words after “1988”.

(8) In CAA 2001—

(a) section 257(3),

(b) section 544(5), and

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) In FA 2002—

(a) in section 66(5), the words from the beginning to the end of the definition of “long-term insurance fund”,

(b) in paragraph 19(1) of Schedule 12, the definition of “life assurance business”,

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e) in Schedule 29, in paragraph 89(3), the definition of “contracts of long-term insurance” and paragraph 138(1).

(11) In Schedule 23 to FA 2003—

(a) in paragraph 30, the definitions of “insurance company” and “life assurance business”, and

(b) in paragraph 31, the entries relating to those definitions.

(12) Section 134(4)(c) of FA 2006.

Minor changes

15

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) In paragraph 17 of Schedule 7 to FA 1991 (transitional provisions for chargeable gains and unrelieved general annuity business)—

(a) in sub-paragraph (4), for the words after “in an accounting period” substitute “ is so much of the chargeable gains arising to the company in the accounting period as are referable to its basic life assurance and general annuity business. ”, and

(b) omit sub-paragraphs (4A) and (5).

Obsolete etc provisions

16

(1) Omit the following provisions (which are obsolete or of limited value).

(2) In the Table in section 98 of TMA 1970, the words “or 441A(3)” in both columns.

(3) In ICTA—

(a) in section 76(7), in Step 3, the entries relating to section 587B(8)(b)(i) of ICTA and paragraph 23(2) of Schedule 13 to FA 2002,

(b) section 440(2A) and (2B) (transfer of assets: loan relationships and derivative contracts),

(d) section 443 (life policies carrying rights not in money),

(e) section 444 (life policies issued before 5th August 1965),

(f) section 587B(8) (gifts to charities etc: modifications for insurance companies), and

(g) in section 807A (disposals and acquisitions of company loan relationships with or without interest), subsections (4) and (5)(b) and, in subsection (6)(a), “or an insurance credit”.

(4) In FA 1989—

(a) section 84(2), (3), (5) and (6) (transitional provisions etc),

(b) in section 85(3) (commencement of provisions for charge of certain BLAGAB receipts), “(including the 1990 component period)”,

(c) in section 86 (spreading of relief for acquisition expenses), subsections (3) and (3A) and, in subsection (10), “(including the 1990 component period)”, and

(d) section 87 (management expenses).

(5) In FA 1996—

(a) paragraph 1(1) and (2) of Schedule 11 (loan relationships: I minus E basis),

(b) paragraph 4(6) of that Schedule (non-trading deficits: transitional provision),

(d) paragraph 1(3) of Schedule 15 (apportionment of loan relationship credits and debits: transitional provision).

(6) Paragraph 18 of Schedule 12 to FA 1997 (leasing arrangements: meaning of “accounting purposes” for insurance companies).

(7) Paragraph 86 of Schedule 18 to FA 1998 (non-annual actuarial investigations).

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) Section 87(3) and (4) of FA 2001 (tax credits etc).

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commencement

17

(1) The amendment made by paragraph 1 has effect on and after 10th May 2007.

(2) The amendments made by paragraphs 2, 4(2) and (4), 5, 6 and 8 to 15 have effect in relation to periods of account beginning on or after 1st January 2007.

(3) But the amendment made by paragraph 2(4) does not apply where the transfer of business concerned took place before 10th May 2007.

(4) The amendment made by paragraph 3 has effect in relation to losses accruing in a period of account beginning on or after 1st January 2007.

(5) The amendment made by paragraph 4(3) has effect in relation to periods of account beginning on or after 1st January 2005.

SCHEDULE 11

Restriction on amount of technical provisions made by general insurers

1

(1) This paragraph applies if a general insurer makes any technical provisions for a period of account.

(2) The amount of the technical provisions stated in the accounts for that period is to be taken into account in the calculation for tax purposes of the profits of the general insurer's trade for that period unless an officer of Revenue and Customs considers that that amount exceeds the appropriate amount.

(3) In that case—

(a) the excess is not to be taken into account in that calculation, and

(b) the profits of the general insurer's trade for the next period of account are to be adjusted accordingly for tax purposes.

(4) “The appropriate amount” means such amount as is determined in accordance with regulations made by the Commissioners for Her Majesty's Revenue and Customs to be the appropriate amount to be taken into account in that calculation.

(5) Any such determination must be made by reference to the time at which the technical provisions are made.

Enforcement

2

(1) This paragraph applies if an officer of Revenue and Customs gives a notice of enquiry under paragraph 24(1) of Schedule 18 to FA 1998 to a general insurer.

(2) The officer may by notice require the general insurer (at the general insurer's own expense) to provide the officer with a report as to whether (and, if so, the extent to which) the amount of any technical provisions stated in the accounts for any period covered by the company tax return into which the enquiry is made exceeds the appropriate amount.

(3) The report must cover such matters, and be in such form, as the officer may reasonably require for the purposes of the enquiry.

(4) The report must be made by a person who is appointed by the general insurer unless the officer requires the report to be made instead by another person.

(5) As soon as the general insurer appoints a person to make the report, the general insurer must give a notice to the officer specifying that person.

(6) A notice under sub-paragraph (2) must specify the time (which must not be less than 30 days) within which the general insurer is to comply with it.

(7) The following provisions of Schedule 36 to FA 2008 (information and inspection powers) apply in relation to a notice under sub-paragraph (2) as they apply in relation to a taxpayer notice under that Schedule—

(a) paragraphs 29 and 32 (right to appeal), and

(b) Part 7 (penalties).

Supplementary

3

(1) In paragraph 1 “general insurer” means—

(a) a company within the charge to corporation tax which carries on general business,

(b) a CFC (within the meaning of Part 9A of the Taxation (International and Other Provisions) Act 2010) which carries on general business, or

(2) In paragraph 2 “general insurer” means—

(a) a company within the charge to corporation tax which carries on general business, or

(b) a company which for the purposes of Part 9A of the Taxation (International and Other Provisions) Act 2010 has an interest in a CFC (within the meaning of that Part) which carries on general business.

(3) For the purposes of sub-paragraphs (1) and (2) “general business” means business which consists of the effecting or carrying out of contracts that fall within Part 1 of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544).

(4) In the case of members of a Lloyd's syndicate, references in paragraph 1 to any accounts for a period are to the return of the syndicate's profits or loss for that period under regulation 4 of the Lloyd's Underwriters (Tax) Regulations 2005 (S.I. 2005/3338).

(5) In paragraph 1 “period of account”—

(a) except in the case of members of a Lloyd's syndicate, means a period of account for which an account is made up, and

(b) in the case of members of a Lloyd's syndicate, means an underwriting year in which profits or losses are declared for an earlier underwriting year.

(6) In paragraphs 1 and 2 “technical provisions”, except in the case of members of a Lloyd's syndicate, means any of the following—

(a) provisions for claims outstanding,

(b) provisions for unearned premiums, and

(7) In paragraphs 1 and 2 “technical provisions”, in the case of members of a Lloyd's syndicate (“the syndicate”), means—

(a) so much of the reinsurance to close amounts of the members, and

(b) so much of the provisions made by an open Lloyd's syndicate of which any member of the syndicate is a member for claims outstanding, unearned premiums and unexpired risks,

as may be determined by or under regulations made by the Commissioners for Her Majesty's Revenue and Customs.

(8) For this purpose—

(a) the reference to reinsurance to close amounts of any member of a Lloyd's syndicate is to any consideration which, in accordance with the rules or practice of Lloyd's, is given (or any amount which, in accordance with those rules or practice, is treated as consideration given) by the member in respect of the liabilities arising from the member's underwriting business in an underwriting year for the purpose of closing the accounts of the business for that year, and

(b) a Lloyd's syndicate is an “open” Lloyd's syndicate at any time after the end of its closing year if, at that time, the accounts of its business for the underwriting year for which it was formed have not been closed,

and in paragraph (b) “closing year” has the same meaning as in Chapter 3 of Part 2 of FA 1993 or Chapter 5 of Part 4 of FA 1994.

(9) In this paragraph—

“Lloyd's syndicate” means a syndicate of underwriting members of Lloyd's formed for an underwriting year, and

“underwriting year” means the calendar year.

(10) In this paragraph references to provisions for claims outstanding, unearned premiums and unexpired risks have the same meaning as in Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.

(11) The Commissioners for Her Majesty's Revenue and Customs may by regulations—

(a) provide in prescribed circumstances for paragraph 1 not to apply in relation to any member of a Lloyd's syndicate, or

(b) provide in prescribed circumstances for a reduction in relation to any member of a Lloyd's syndicate of the amount which (as a result of that paragraph) is not to be taken into account in the calculation mentioned in sub-paragraph (2) of that paragraph.

(12) The Treasury may by regulations amend sub-paragraphs (1) to (3) (definition of “general insurer”).

(13) In the event of any changes in the rules or practice of Lloyd's, the Commissioners for Her Majesty's Revenue and Customs may by regulations make such amendments of paragraph 1 and this paragraph as appear to the Commissioners to be expedient having regard to those changes.

(14) Regulations under section 182(1)(a) of FA 1993 or section 229(1)(a) of FA 1994 (assessment and collection of tax charged in case of Lloyd's underwriters) may, in particular, include provision applying paragraph 2 with modifications in the case of members of a Lloyd's syndicate.

(15) Regulations under paragraph 1 or this paragraph may—

(a) make different provision for different purposes, and

(b) make supplementary, incidental, consequential and transitional provision.

Repeal of section 107 of FA 2000

4

In FA 2000, omit section 107 (general insurance reserves).

Commencement

5

(1) Paragraphs 1 to 3 have effect in relation to periods of account ending on or after the day on which this Act is passed.

(2) The repeal of section 107 of FA 2000 made by paragraph 4 has effect as follows.

(3) The repeal of—

(a) subsections (1) to (3) of that section (technical provisions made by a general insurer proving to be excessive or insufficient),

(b) subsections (5) to (8) and (10) of that section so far as relating to those subsections, and

has effect in relation to any amount that would otherwise have been treated as a receipt or an expense of a trade in computing for tax purposes the profits of the trade for any period of account ending on or after the day on which this Act is passed.

(4) The repeal of—

(a) subsection (4) of that section (election for any part of technical provisions not to be taken into account in a period of account),

(b) subsections (5) to (8) and (10) of that section so far as relating to that subsection, and

has effect so that no election may be made under that subsection in respect of technical provisions made by a general insurer for any period of account which begins on or after that day.

(5) There is a restriction in relation to any election made by a general insurer under that subsection in respect of technical provisions made by the general insurer for the final election period.

(6) The restriction is that the amount of the part of those provisions which the general insurer elects not to be taken into account in computing for tax purposes the profits of the general insurer's trade for that period must not exceed 10% of the total amount of those provisions.

(7) In sub-paragraph (5) “the final election period”, in relation to any general insurer, means the general insurer's first period of account ending on or after the day on which this Act is passed.

SCHEDULE 12

Exempt life or endowment business

1

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

2

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

3

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

Other exempt business

4

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

5

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

Commencement

6

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

SCHEDULE 13

Purpose of Schedule

1

(1) The purpose of this Schedule is to secure that in the case of an arrangement—

(a) which involves the sale of securities and the subsequent purchase of securities, and

(b) which equates, in substance, to a transaction for the lending of money at interest from or to a company (with the securities which were sold as collateral for the loan),

the charge to corporation tax in that case in respect of chargeable gains reflects the fact that the arrangement equates, in substance, to such a transaction.

(2) But this is not to be read as preventing the rules in this Schedule about corporation tax in respect of chargeable gains from having no effect in relation to debtor quasi-repos and creditor quasi-repos.

Meaning of debtor repo

2

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

Meaning of debtor quasi-repo

3

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

Ignoring effect on borrower of sale of securities: debtor repos, debtor quasi-repos and other arrangements

4

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

Relief for borrower for finance charges in respect of the advance: debtor repos and debtor quasi-repos

5

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

Ignoring sale and subsequent purchase for purposes of chargeable gains: debtor repos

6

(1) This paragraph applies if—

(a) a company (“the borrower”) has a debtor repo, and

(b) the borrower (having sold the securities under the arrangement to the lender) is the only person with the right or obligation under the arrangement to buy those or similar securities at any subsequent time.

(2) The sale of the securities, and the subsequent purchase of those or similar securities, by the borrower under the arrangement are to be ignored for the purposes of corporation tax in respect of chargeable gains (but see sub-paragraph (5)).

(3) If at any time after the initial sale of the securities—

(a) it becomes apparent that the borrower will not subsequently buy those or similar securities under the arrangement, or

(b) the accounting condition ceases to be met,

the borrower is to be treated for the purposes of corporation tax in respect of chargeable gains as disposing of the securities at that time for a consideration equal to their market value at that time.

(4) The accounting condition ceases to be met if, in accordance with generally accepted accounting practice, the accounts of the borrower for any period after the one in which the advance is received do not record a financial liability in respect of the advance (except as a result of the subsequent purchase of the securities or similar securities).

(5) If sub-paragraph (3) applies because the accounting condition ceases to be met, any subsequent purchase of those or similar securities by the borrower under the arrangement is not to be ignored for the purposes of corporation tax in respect of chargeable gains as a result of this paragraph.

(6) For the purposes of this paragraph references to the borrower include a partnership of which the borrower is a member.

Meaning of creditor repo

7

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

Meaning of creditor quasi-repo

8

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

Ignoring effect on lender of sale of securities: creditor repos and creditor quasi-repos

9

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

Charge on lender for finance return in respect of the advance: creditor repos and creditor quasi-repos

10

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

Ignoring purchase and subsequent sale for purposes of chargeable gains: creditor repos

11

(1) This paragraph applies if—

(a) a company (“the lender”) has a creditor repo, and

(b) the lender (having bought the securities under the arrangement from the borrower) is the only person with the right or obligation under the arrangement to sell those or similar securities at any subsequent time.

(2) The purchase of the securities, and the subsequent sale of those or similar securities, by the lender under the arrangement are to be ignored for the purposes of corporation tax in respect of chargeable gains (but see sub-paragraph (5)).

(3) If at any time after the initial purchase of the securities—

(a) it becomes apparent that the lender will not subsequently sell those or similar securities under the arrangement, or

(b) the accounting condition ceases to be met,

the lender is to be treated for the purposes of corporation tax in respect of chargeable gains as acquiring the securities at that time for a consideration equal to their market value at that time.

(4) The accounting condition ceases to be met if, in accordance with generally accepted accounting practice, the accounts of the lender for any period after the one in which the advance is made do not record a financial asset in respect of the advance (except as a result of the subsequent sale of the securities or similar securities).

(5) If sub-paragraph (3) applies because the accounting condition ceases to be met, any subsequent sale of those or similar securities by the lender under the arrangement is not to be ignored for the purposes of corporation tax in respect of chargeable gains as a result of this paragraph.

(6) For the purposes of this paragraph references to the lender include a partnership of which the lender is a member.

Repo under arrangement designed to produce quasi-interest: anti-avoidance

12

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

Requirements to deduct tax from manufactured payments: creditor repos and debtor repos

13

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

Interpretation etc

14

(1) In this Schedule—

“arrangement” includes any agreement or understanding (whether or not legally enforceable),

“creditor quasi-repo” has the meaning given by section 544 of CTA 2009,

“creditor repo” has the meaning given by section 543 of CTA 2009,

“debtor quasi-repo” has the meaning given by section 549 of CTA 2009,

“debtor repo” has the meaning given by section 548 of CTA 2009,

“discharge”, in relation to a liability, means the discharge of the liability in whole or in part (and “discharged” is to be read accordingly),

“the loan relationship rules” means the provisions of Part 5 of CTA 2009,

“market value” has the same meaning as in TCGA 1992,

“overseas dividend”, in relation to overseas securities, means any interest, dividend or other annual payment payable in respect of the securities,

“overseas securities” means shares, stock or other securities issued by—a government or public or local authority of a territory outside the United Kingdom, orany other body of persons not resident in the United Kingdom,

“securities” (except in the definition of “overseas securities”) means shares, stock or other securities issued by—the government of the United Kingdom,any public or local authority in the United Kingdom, orany company or other body resident in the United Kingdom,or overseas securities, and

“tax advantage” has the meaning given by section 840ZA of ICTA.

(2) For the purposes of this Schedule references to a person's receiving any asset include the person's obtaining directly or indirectly the value of any asset or otherwise deriving directly or indirectly any benefit from it.

(3) For the purposes of this Schedule—

(a) in any case where a person buys securities (or has a right or obligation to buy securities) but the securities are (or are to be) held for another person's benefit, that other person is treated as buying (or having the right or obligation to buy) the securities, and

(b) in any case where a person sells securities but the proceeds of the sale are held for another person's benefit, that other person is treated as selling the securities.

(4) For the purposes of this Schedule securities are similar if they entitle their holders to—

(a) the same rights against the same persons as to capital, interest and dividends, and

(b) the same remedies for the enforcement of those rights,

in spite of any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred.

(5) For the purposes of this Schedule it does not matter whether or not provision of any arrangement conferring a right or imposing an obligation on any person to buy any securities is subject to any conditions.

(6) For the purposes of this Schedule an arrangement is in force from the time when the securities are initially sold until the earlier of—

(a) the time when the relevant repurchase takes place, and

(b) the time when it becomes apparent that that repurchase will not take place.

(7) For this purpose “the relevant repurchase” means—

(a) in the case of a debtor repo, the subsequent buying of the securities or similar securities,

(b) in the case of a debtor quasi-repo, the subsequent buying of the securities or other securities by the borrower, the receipt of the asset from the borrower or (as the case may be) the discharge of the liability to the borrower,

(d) in the case of a creditor quasi-repo, the subsequent sale of the securities or other securities by the lender, the receipt of the asset from the lender or (as the case may be) the discharge of the liability to the lender.

(8) Any reference in this Schedule to an amount being recognised in determining a company's profit or loss for a period is to an amount being recognised for accounting purposes—

(a) in the company's profit and loss account or income statement,

(b) in the company's statement of recognised gains and losses or statement of changes in equity, or

(c) in any other statement of items brought into account in calculating the company's profits and losses for that period.

(9) In determining for the purposes of this Schedule whether an amount is recorded as a financial asset or liability in respect of the advance it is to be assumed that the period of account in which the advance is received or made ended immediately after the receipt or making of the advance.

(10) For the purposes of paragraphs 6(4) and 11(4)—

(a) any period of account in which the advance is received or made is treated as if it ended immediately after the receipt or making of the advance, and

(b) a new period of account is treated as beginning immediately after the end of that period.

(11) If any person does not draw up accounts in accordance with generally accepted accounting practice, this Schedule applies as if the accounts had been drawn up by the person in accordance with that practice.

Power to modify Schedule

15

(1) The Treasury may by regulations provide for all or any of the provisions of this Schedule to apply with modifications in relation to either or both of the following cases—

(a) non-standard repo cases (see sub-paragraphs (2) to (5)), and

(b) cases involving redemption arrangements (see sub-paragraph (6)).

(2) A case is a non-standard repo case if—

(a) a company has a repo,

(b) there has been a sale of the securities under the arrangement or arrangements by reference to which the company has the repo, and

(3) Condition A is that those securities, or similar or other securities, are not subsequently bought under the arrangement or arrangements.

(4) Condition B is that provision is made by or under an arrangement for different or additional securities to be treated as, or as included with, securities which, for the purposes of the subsequent purchase, are to represent those initially sold.

(5) Condition C is that provision is made by or under an arrangement for securities to be treated as not so included.

(6) A case involves redemption arrangements if—

(a) arrangements, corresponding to those made in cases where a company has a repo, are made in relation to securities that are to be redeemed in the period after their sale, and

(b) the arrangements are such that a person (instead of having the right or obligation to buy those securities, or similar or other securities, at any subsequent time) has a right or obligation in respect of the benefits that will result from the redemption.

(7) The regulations may—

(a) make different provision for different cases, and

(b) contain incidental, supplemental, consequential and transitional provision and savings.

(8) Regulations about paragraph 6 or 11 may, in particular, include modifications of TCGA 1992 in relation to cases where, as a result of the regulations, any acquisition or disposal is excluded from those which are to be ignored for the purposes of corporation tax in respect of chargeable gains.

(9) In this paragraph—

“modifications” include exceptions and omissions, and

“repo” means—a debtor repo or debtor quasi-repo, ora creditor repo or creditor quasi-repo (including anything treated, as a result of section 547 of CTA 2009, as a creditor repo for the purposes of section 546 of that Act).

SCHEDULE 14

Income and Corporation Taxes Act 1988 (c. 1)

1

ICTA is amended as follows.

2

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

3

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

4

Omit sections 730A and 730B (treatment of price differential on sale and repurchase of securities).

5

Omit section 730BB (exchange gains and losses on sale and repurchase of securities).

6

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

7

Omit sections 737A to 737C (sale and repurchase of securities: deemed manufactured payments).

8

Omit section 737E (power to modify sections 730A, 730BB and 737A to 737C).

9

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

10

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

Taxation of Chargeable Gains Act 1992 (c. 12)

11

TCGA 1992 is amended as follows.

12

(1) Section 263A (agreements for sale and repurchase of securities) is amended as follows.

(2) In subsection (1), for the words from the beginning to “were different” substitute “ Subject to subsections (3) and (4) below, in any case falling within section 607(1) of ITA 2007 (treatment of price differences under repos) ”.

(3) After that subsection insert—

(1A) If, at any time after the acquisition mentioned in subsection (1)(a) above, it becomes apparent that the interim holder will not dispose of the securities to the repurchaser, the interim holder shall be treated for the purposes of capital gains tax as acquiring them at that time for a consideration equal to their market value at that time. (1B) If, at any time after the disposal mentioned in subsection (1)(b) above, it becomes apparent that the original owner will not acquire the securities as the repurchaser, the original owner shall be treated for the purposes of capital gains tax as disposing of them at that time for a consideration equal to their market value at that time.

(4) Omit subsection (2).

(5) For subsections (5) and (6) substitute—

(5) Expressions used in this section and section 607 of ITA 2007 have the same meaning in this section as in that section. (6) This section does not apply for the purposes of corporation tax in respect of chargeable gains.

(6) The heading accordingly becomes “ Agreements for sale and repurchase of securities: capital gains tax ”.

13

(1) For paragraph 12 of Schedule 7AC substitute—

(12) (1) This paragraph applies where— (a) a company (“the borrower”) which holds shares in another company sells the shares under an arrangement by reference to which the borrower has a debtor repo, and (b) by virtue of paragraph 6 of Schedule 13 to the Finance Act 2007 (sale and repurchase of securities) the sale is ignored for the purposes of corporation tax in respect of chargeable gains. (2) For the period for which the arrangement is in force— (a) the borrower shall be treated for the purposes of this Part as continuing to hold the shares and accordingly as retaining its entitlement to any rights attaching to them, and (b) the lender shall be treated for those purposes as not holding the shares and as not becoming entitled to any such rights. This is subject to the following qualification. (3) If at any time before the end of that period the borrower, or another member of the same group as the borrower, becomes the holder— (a) of any of the shares, or (b) of any shares directly or indirectly representing any of them, sub-paragraph (2) does not apply after that time in relation to those shares or, as the case may be, the shares represented by them. (4) Expressions used in this paragraph and in Schedule 13 to the Finance Act 2007 have the same meaning in this paragraph as in that Schedule.

Finance Act 1996 (c. 8)

14

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

15

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

16

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

17

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

18

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

Finance Act 1994 (c. 9)

19

In section 229(1)(ca) of FA 1994 (Lloyd's corporate members: regulations), for sub-paragraph (ii) substitute—

(ii) arrangements involving repos (within the meaning of paragraph 15 of Schedule 13 to the Finance Act 2007) or redemption arrangements (within the meaning of that paragraph);

Finance Act 2006 (c. 25)

20

In section 139 of FA 2006 (Real Estate Investment Trusts: manufactured dividends), omit subsection (5).

Income Tax Act 2007 (c. 3)

21

ITA 2007 is amended as follows.

22

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

23

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

24

In section 886(2) (interest paid by recognised clearing houses etc), after “repos)” insert “ , or paragraph 5 of Schedule 13 to FA 2007 (relief for borrower for finance charges in case of debtor repos and debtor quasi-repos), ”.

SCHEDULE 15

Imputation of chargeable profits and creditable tax of controlled foreign companies

1

(1) Section 747 of ICTA (imputation of chargeable profits and creditable tax of controlled foreign companies) is amended as follows.

(2) After subsection (3) insert—

(3A) In the case of an apportionment to a company resident in the United Kingdom which has made an application under section 751A which has been granted, subsection (3) above has effect subject to that section.

(3) After subsection (5) insert—

(5A) Where the resident company has made an application under section 751A which has been granted, it shall be assumed for the purposes of subsection (5) above that— (a) each of the persons who are connected or associated with the resident company has made an application under that section to the same effect, and (b) all the applications have been granted.

Residence

2

In section 749 of ICTA (residence), insert at the end—

(10) For the purposes of subsection (8) and (9) above, the effect of any application under section 751A shall be disregarded.

Elections and designations under section 749: supplementary provisions

3

In section 749A of ICTA (elections and designations under section 749: supplementary provisions), insert at the end—

(9) For the purposes of this section the effect of any application under section 751A shall be disregarded.

Territories with a lower level of taxation

4

In section 750(3) of ICTA (territories with a lower level of taxation), after the “and” at the end of paragraph (a) insert—

(ab) there shall be disregarded the effect of any application under section 751A; and

Reduction in chargeable profits for certain activities of EEA business establishments

5

In ICTA, after section 751 insert—

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