Income and Corporation Taxes Act 1988

• (6) In this paragraph “the self-assessment appointed day” means the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (self-assessment management provisions).

SCHEDULE 19ABA

Part 1 — INTRODUCTORY

1

• (1) In their application to a BLAGAB group reinsurer the life assurance provisions of the Corporation Tax Acts shall have effect with the following modifications.

• (2) In this paragraph “BLAGAB group reinsurer” means an insurance special purpose vehicle which—

• (a) would fall within the definition of “insurance company” in section 431 if the words after paragraph (b) of the definition were disregarded, and

• (b) meets the BLAGAB group reinsurer conditions.

• (3) For the purposes of sub-paragraph (2), an insurance special purpose vehicle meets the BLAGAB group reinsurance conditions if—

• (a) it carries on basic life assurance and general annuity business,

• (b) all of its life assurance business is reinsurance business and that business is of a type excluded from section 431G(3) by regulations made by the Board, and

• (c) section 431G(3)(b) does not apply.

Part 2 — MODIFICATIONS OF THIS ACT

2

This Act shall have effect with the following modifications.

Modification of section 76 (expenses of insurance companies)

3

• (1) Modify section 76 (expenses of insurance companies) as follows.

• (2) In subsection (3) for the words from “means” to the end substitute—

means— (a) in the case of a company preparing IAD accounts, expenses included in item II.8 or 9(a) of the long-term business technical account, and (b) in the case of a company preparing IAS accounts, such of the expenses included in the income statement in the IAS accounts as are equivalent to expenses that would be included in item II.8 or 9(a) of the long-term business technical account in IAD accounts, but does not include any of the amounts falling within subsection (4), (5) or (6) below.

.

• (4) In subsection (7)—

• (a) omit Step 6;

• (b) in Step 7—

• (i) in paragraph (a) for “Subtotal 3” substitute “ Subtotal 2 ”;

• (ii) for “Subtotal 4” substitute “ the expenses deduction ”;

• (c) omit Step 8.

• (5) In subsection (8) omit paragraphs (b) and (c).

• (6) In subsection (12)(a) for “Step 8” insert “ Step 7 ”.

• (7) In subsection (15) after the definition of “expenses payable” insert—

“long-term business technical account” means the technical account for life-assurance business included in the IAD accounts, or where the technical account included in the IAD accounts for non-life-insurance business of the company is used for all business, such part of that account as relates to the long-term business of the company;

.

Modification of section 431 (interpretative provisions relating to insurance companies)

4

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

• (2) Insert the following definitions in the appropriate places—

• “IAD accounts” means accounts drawn up in accordance with the Council Directive of 19th December 1991 on the annual accounts of insurance undertakings (No. 91/674/EEC) ;

,

“IAS accounts” means accounts prepared in accordance with international accounting standards;

.

• (3) In the definition of “insurance company” at the end insert “ unless it meets the BLAGAB group reinsurer conditions (within the meaning of paragraph 1 of Schedule 19ABA ”.

• (4) For the definition of “liabilities” substitute—

“liabilities” means— 1. technical provisions (item C), and 2. technical provisions for linked liabilities (item D), in the liabilities in the balance sheet format in paragraph 9 of Schedule 9A to the Companies Act 1985 in the IAD accounts or equivalent provisions in the IAS accounts;;

;

• (5) For the definition of “long-term insurance fund” substitute—

“long-term insurance fund” means— 1. the technical account for life assurance business of the company included in the IAD accounts, 2. where the technical account included in the IAD accounts for non-life-insurance business of the company is used for all business, such part of that account as relates to the long-term business of the company, or 3. such part of the income statement as relates to the life assurance business of the company included in the IAS accounts, and references to assets of the long-term insurance fund shall be read as references to assets from which any income or gain is or would be included in that technical account or that part of the technical account or that part of the income statement;.

.

• (6) For the definition of “periodical return” substitute—

“periodical return” means— 1. in relation to a company preparing IAD accounts, the IAD accounts, and 2. in relation to a company preparing IAS accounts, the IAS accounts;

;

• (7) Omit the definition of “period of account”;

• (8) For the definition of “value” substitute—

“value” means the value taken into account for the purposes of IAD accounts or IAS accounts

.

Modification of section 432B (apportionment of receipts brought into account)

5

• (1) Modify section 432B (apportionment of receipts brought into account) as follows.

• (2) In subsection (1) for “sections 432C to 432G” substitute “ sections 432C and 432G ”.

• (3) In subsection (2) for “sections 432C to 432G” substitute “ sections 432C and 432G ”.

• (4) Omit subsection (3).

Modification of section 432E (section 432B apportionment: participating funds)

6

Omit section 432E (section 432B apportionment: participating funds).

Modification of section 432F (section 432B apportionment: supplementary provisions)

7

Omit section 432F (section 432B apportionment: supplementary provisions).

Modification of section 444AA (transfers of business: deemed periodic return)

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.

.

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, andAPL 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 being brought forward in that balance sheet, andin 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) 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) 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) 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 ”.

. . .

9

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

. . .

10

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

. . .

11

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

Part 3 — MODIFICATION OF THE FINANCE ACT 1989

Modification of the Finance Act 1989

12

The Finance Act 1989 shall have effect with the following modifications.

Modification of section 82B (unappropriated surplus on valuation)

13

Omit section 82B (unappropriated surplus on valuation).

Modification of section 82D (treatment of profits: life assurance—adjustment consequent on change in Insurance Prudential Sourcebook)

14

Omit section 82D (treatment of profits: life assurance—adjustment consequent on change in Insurance Prudential Sourcebook).

Modification of section 82E (section 82D: treatment of transferors under insurance business transfer schemes)

15

Omit section 82E (section 82D: treatment of transferors under insurance business transfer schemes).

Modification of section 82 (section 82D: treatment of transferees under insurance business transfer schemes)

16

Omit section 82F (section 82D: treatment of transferees under insurance business transfer schemes).

Modification of section 83 (receipts to be taken into account)

17

In section 83 (receipts to be taken into account)—

• (a) after paragraph (b) insert—

(ba) a transfer from the fund for future appropriations,

;

• (b) after subsection (2) insert—

(2YA) A transfer to the fund for future appropriations shall be treated as brought into account for that period as a decrease in the value of non-linked assets and taken into account as an expense of the period of account.

;

• (c) omit subsections (2A) to (2E).

Modification of section 83XA (structural assets)

18

In section 83XA (structural assets) in subsection (3)) for the words from “means” to the end substitute “ means assets listed under 1 and 2 in C(II) in Article 6 of the Council Directive of 19th December 1991 on the annual accounts and consolidated accounts of insurance undertakings (No. 91/674/EEC) ”.

Modification of section 83YA (changes in value of assets brought into account: non-profit companies)

19

Omit section 83YA (changes in value of assets brought into account: non-profit companies).

Modification of section 83YB (meaning of “appropriate line 51” amount for purposes of section 83YA)

20

Omit section 83YB (meaning of “appropriate line 51” amount for purposes of section 83YA).

Modification of section 83YC to 83YF (financing-arrangement-funded transfers)

20A

Omit sections 83YC to 83YF (financing-arrangement-funded transfers).

Modification of section 83A (meaning of brought into account)

21

• (1) Modify section 83A (meaning of “brought into account”) as follows.

• (2) For subsection (2) substitute—

(2) The accounts recognised for the purposes of those sections are— (a) such technical accounts (or such parts of those accounts) included in the IAD accounts, or (b) such parts of the income statements included in the IAS accounts, as relate to the whole of the company's long-term business.

.

• (3) Omit subsections (3) to (4).

Modification of section 83B (changes in recognised accounts: attribution of amounts carried forward under section 432F of Taxes Act 1988)

22

Omit section 83B (changes in recognised accounts: attribution of amounts carried forward under section 432F of Taxes Act 1988).

Modification of section 85A (excess adjusted life assurance trade profits)

23

In section 85A (excess adjusted life assurance trade profits) in subsection (8)(a) for “Step 8” substitute “ Step 7 ”.

Modification of section 86 (spreading of relief for acquisition expenses)

24

Omit section 86 (spreading of relief for acquisition expenses).

Modification of section 89 (policy holders' share of profits)

25

In section 89 (policy holders' share of profits) omit subsection (6).

Part 4 — Modification of Part 2 of TIOPA 2010 (double taxation relief)

26

TIOPA 2010 shall have effect with the following modifications.

Modification of section 102 (interpreting sections 99 to 101 for life assurance or gross roll-up business)

27

Omit section 102.

Modification of section 103 (interpreting sections 99 to 101 for other insurance business)

28

In section 103(1) omit the words from “if” to the end.

SCHEDULE 19AC

1

In its application to an overseas life insurance company this Act shall have effect with the following modifications.

2

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

3

• (1) In subsection (2) of section 11, the following paragraphs shall be treated as inserted after paragraph (a)—

• (“) where section 11B applies for an accounting period, any trading or other income arising in that period from assets which by virtue of that section are attributed to the branch or agency at the time the income arises (but so that this paragraph shall not include distributions received from companies resident in the United Kingdom); and

• (ab) where section 11C applies for an accounting period, any trading or other income falling within section 11C(2) in that period (but so that this paragraph shall not include distributions received from companies resident in the United Kingdom); and”.

• (2) The following shall be treated as inserted after paragraph (b) of that subsection “and

• (c) chargeable gains accruing to the company on the disposal of assets of the company’s long-term insurance fund situated outside the United Kingdom and used or held for the purposes of the branch or agency immediately before the disposal; and

• (d) where section 11B applies for an accounting period, chargeable gains accruing to the company in that period on the disposal of assets which by virtue of that section are attributed to the branch or agency immediately before the disposal; and

• (e) where section 11C applies for an accounting period, chargeable gains accruing to the company in that period by virtue of section 11C(3).”

• (3) The following subsection shall be treated as inserted after that subsection—

• (“) For the purposes of subsection (2)(c) above—

• (a) section 275 of the 1992 Act (location of assets) shall apply as it applies for the purposes of that Act;

• (b) “ long-term insurance fund” has the meaning given by section 431(2).”

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

• (1) The following sections shall be treated as inserted after section 11—

(11A) (1) For the purposes of this section and sections 11B and 11C— (a) an asset is at any time a section 11(2)(b) asset if, were it to be disposed of at that time, any chargeable gains accruing to the company on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 11(2)(b); (b) an asset is at any time a section 11(2)(c) asset if, were it to be disposed of at that time, any chargeable gains accruing to the company on the disposal would form part of its chargeable profits for corporation tax purposes by virtue of section 11(2)(c); (c) relevant contracts and policies are contracts and policies the effecting of which constitutes the carrying on of life assurance business; and in this section and those sections any expression to which a meaning is given by section 431(2) has that meaning. (2) For the purposes only of subsection (1)(a) and (b) above any enactment which— (a) limits any chargeable gain on the disposal of an asset; (b) treats any gain on the disposal of an asset as not being a chargeable gain; or (c) treats any disposal of an asset as not giving rise to a chargeable gain, shall be disregarded. (3) For the purposes of sections 11B and 11C— (a) the notional value at any time is the value at that time of the assets which the branch or agency would reasonably be expected to hold at that time in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency; (b) the section 11B value at any time is the value at that time of such of the section 11(2)(b) and section 11(2)(c) assets as are assets held at that time in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency; (c) the section 11C value at any time is the value at that time of— (i) such of the section 11(2)(b) and section 11(2)(c) assets as are assets held at that time in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency; and (ii) the assets which by virtue of section 11B are attributed to the branch or agency at that time; (d) a relevant fund is a fund of assets of the company (wherever those assets may be situated) any part of which is held in consequence of any relevant contracts, and any relevant policies, which at any time in the accounting period concerned are carried out at the branch or agency. (4) In applying subsection (3)(a) above as regards a particular time, it shall be assumed that— (a) at that time the branch or agency is a company resident in the United Kingdom, undertaking the activities it then actually undertakes; (b) the terms of any dealings between the branch or agency and another part of the company are not (or not necessarily) their actual terms but are such as would be the terms if the branch or agency and the other part of the company were independent persons dealing at arm’s length. (11B) (1) This section applies for an accounting period where the mean of the notional value at the beginning and end of the accounting period exceeds the mean of the section 11B value at those times. (2) Where this section applies for an accounting period, assets shall be attributed to the branch or agency in that period in accordance with the following provisions of this section. (3) There shall be attributed to the branch or agency in the accounting period such of the qualifying assets of the company as (having regard to the excess mentioned in subsection (1) above) it is just and reasonable to attribute to the branch or agency. (4) For the purposes of subsection (3) above— (a) where an asset is a qualifying asset for the whole of the accounting period it may, subject to paragraphs (c) and (d) below, be attributed to the branch or the agency for the whole or any part or parts of that period; (b) where an asset is a qualifying asset for any portion of the accounting period it may, subject to paragraphs (c) and (d) below, be attributed to the branch or agency for the whole or any part or parts of that portion; (c) an asset shall not be attributed to the branch or agency for any period of time during which it is a section 11(2)(b) or section 11(2)(c) asset; (d) an asset shall not be attributed to the branch or agency at any particular time unless it is held in consequence of any relevant contracts, and any relevant policies, which at that time are carried out at the branch or agency. (5) An asset of the company is a qualifying asset at any time if it is an asset of one or more of the following descriptions, that is to say— (a) an asset which, in relation to any relevant contracts and any relevant policies which at that time are carried out at the branch or agency, is a linked asset within the meaning given by section 431(2); (b) an asset which at that time is maintained in the United Kingdom as a result of a requirement imposed under section 43 of the Financial Services and Markets Act 2000 other than an asset not treated as so maintained under that requirement; (c) an asset which at that time is treated for the purposes of any such requirement as is mentioned in paragraph (b) above as maintained in the United Kingdom under that requirement; (d) an asset which at that time is held in respect of the business carried on by the branch or agency as a result of a condition of a direction under section 148 of the Financial Services and Markets Act 2000; (e) an asset which at that time is held in a fund which the company is required to maintain under the prudential legislation of a territory outside the United Kingdom in respect of the business carried on by the branch or agency; (f) an asset which is identified in tax returns submitted to a taxing authority of a territory outside the United Kingdom as an asset which at that time is wholly referable to the business carried on by the branch or agency. (11C) (1) This section applies for an accounting period where the mean of the notional value at the beginning and end of the accounting period exceeds the mean of the section 11C value at those times. (2) Where this section applies for an accounting period, the income which falls within this subsection in that period shall be the specified amount of each item of relevant income arising in that period from any assets of the relevant fund. (3) Where this section applies for an accounting period, the chargeable gains accruing to the company in that period by virtue of this subsection shall be the specified amount of each relevant gain accruing to the company in that period on the disposal of any assets of the relevant fund. (4) For the purposes of this section— (a) relevant income is income other than income which falls within section 11(2)(a) or (aa); (b) a relevant gain is a gain (other than a chargeable gain which falls within section 11(2)(b), (c) or (d)) which would be a chargeable gain if the company were resident in the United Kingdom. (5) For the purposes of this section the specified amount of an item of relevant income arising in the accounting period from any assets of the relevant fund shall be determined by the formula— $SI=Iy(NV-CV)RF$ (6) For the purposes of this section the specified amount of a relevant gain accruing to the company in the accounting period on the disposal of any assets of the relevant fund shall be determined by the formula— $SG=Gy(NV-CV)RF$ (7) In subsections (5) and (6) above— - SI is the specified amount of an item of relevant income arising in the accounting period from any assets of the relevant fund; - I is an item of relevant income arising in that period from any assets of the relevant fund; - NV is the mean of the notional value at the beginning and end of that period; - CV is the mean of the section 11C value at the beginning and end of that period; - RF (subject to subsection (8) below) is the mean of the value of the relevant fund at the beginning and end of that period; - SG is the specified amount of a relevant gain accruing to the company in that period on the disposal of any assets of the relevant fund; - G is a relevant gain accruing to the company in that period on the disposal of any assets of the relevant fund. (8) Where the assets of the relevant fund at the beginning or end of the accounting period include— (a) section 11(2)(b) or section 11(2)(c) assets; or (b) assets which by virtue of section 11B are attributed to the branch or agency, the value at that time of the relevant fund for the purposes of the definition of RF in subsection (7) above shall be reduced by the value at that time of those assets. (9) Where in the accounting period the company has more than one relevant fund— (a) in the definition of RF in subsection (7) above, the reference to the value of the relevant fund shall be treated as a reference to the value of the relevant funds; and (b) any other reference in this section to the relevant fund shall be treated as a reference to the relevant funds.”

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

4A

• (1) In section 12(7A), the reference to an insurance business transfer scheme shall be treated as including a reference to a qualifying overseas transfer.

• (2) In this paragraph “a qualifying overseas transfer” means so much of any transfer of the whole or any part of the business of an overseas life insurance company carried on through a branch or agency in the United Kingdom as takes place in accordance with any authorisation granted outside the United Kingdom for the purposes of Article 11 of the third life insurance Directive.

• (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) .

5

After subsection (3) of section 76 there shall be treated as inserted the following subsection—

(3A) In its application to an overseas life insurance company subsection (3) shall have effect as if— (a) in a case where the company is not an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000, the reference to the Form 40 (revenue account) were a reference to the Form 40 relating only to the long-term business carried on by it at a permanent establishment in the UK, and (b) in a case where it is an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000, the reference to “expenses brought into account in line 12, 22 or 25 of Form 40 in the periodical return of the company for a period of account” were a reference to so much of the expenses included in Item II.8 or 9(a) of the Profit and Loss account included in accounts drawn up in accordance with the Council Directive of 19th December 1991 on the annual accounts and consolidated accounts of insurance undertakings (No.91/674/EEC) as are attributable to permanent establishment in the United Kingdom through which the company carries on life assurance business.

.

5ZA

After subsection (11) there shall be treated as inserted the following subsections—

(11A) In subsection (11) the reference in paragraph (a) of the definition of “the relevant income” to income and gains shall be treated as a reference to so much of the income and gains mentioned in that paragraph as falls to be attributed, for the purposes of section 11AA(2) , to the permanent establishment in the United Kingdom through which the company carries on life assurance business. (11B) In that subsection the reference in paragraph (b) of that definition to distributions shall be treated as a reference to so much of the distributions mentioned in that paragraph as falls to be attributed, for the purposes of section 11AA(2), to the permanent establishment in the United Kingdom through which the company carries on life assurance business.

.

5A

• (1) Where an overseas life insurance company receives a qualifying distribution made by a company resident in the United Kingdom and the distribution (or part of the distribution)—

• (a) would fall within paragraph (a), (aa) or (ab) of section 11(2) but for the exclusion contained in that paragraph, and

• (b) is referable to life assurance business, but not to overseas life assurance business,

then the recipient shall be treated for the purposes of the Corporation Tax Acts as entitled to such a tax credit in respect of the distribution (or part of the distribution) as it would be entitled to under section 231 if it were resident in the United Kingdom.

• (2) Where part only of a qualifying distribution would fall within paragraph (ab) of section 11(2) but for the exclusion contained in that paragraph, the tax credit to which the recipient shall be treated as entitled by virtue of sub-paragraph (1) above is the proportionate part of the tax credit to which the recipient would be so treated as entitled in respect of the whole of the distribution.

• (3) Nothing in this paragraph shall be taken to confer on an overseas life insurance company any entitlement to make a claim under section 231(3).

5B

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

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

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

• (4) In this paragraph “UK distribution income” means income of an overseas life insurance company which consists of a distribution (or part of a distribution) in respect of which the company is entitled to a tax credit (and which accordingly represents income equal to the aggregate of the amount or value of the distribution (or part) and the amount of that credit).

5C

• (1) This paragraph applies to income from the investments of an overseas life insurance company attributable to the basic life assurance and general annuity business of the branch or agency in the United Kingdom through which the company carries on life assurance business.

• (2) Where, in computing the income to which this paragraph applies, any profits and gains arising from a FOTRA security, or from any loan relationship represented by it, are excluded by virtue of the tax exemption condition of that security, the amount which by virtue of section 76 is to be deductible by way of management expenses shall be reduced in accordance with sub-paragraph (3) below.

• (3) That amount shall be reduced so that it bears to the amount which would be deductible apart from this sub-paragraph the same proportion as the amount of the income to which this paragraph applies (after applying the provisions of section 154(2) to (7) of the Finance Act 1996) bears to what would be the amount of that income if the tax exemption condition were disregarded.

• (4) Subsection (8) of section 154 of the Finance Act 1996 (meaning of “FOTRA security” and “tax exemption condition”) shall apply for the purposes of this paragraph as it applies for the purposes of that section.

6

• (1) In subsection (2) of section 431, the following definition shall be treated as substituted for the definition of “investment reserve”—

• (2) In that subsection, the following definition shall be treated as substituted for the definition of “liabilities”—

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

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4A) In that subsection the following definition shall be inserted at the appropriate place—

• (5) In that subsection, the following definition shall be treated as substituted for the definition of “value” —

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6A

In section 431D(1), the words “carried on through a branch or agency in the United Kingdom by an overseas life insurance company” shall be treated as inserted after the words “means life assurance business”.

7

• (1) Section 432A has effect as if the references in subsections (3), (6) and (8) to assets were to such of the assets concerned as are—

• (a) section 11(2)(b) assets,

• (b) section 11(2)(c) assets, or

• (c) assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;

and as if the references in subsections (6) and (8) to liabilities were to such of the liabilities concerned as are attributable to the branch or agency.

• (2) For the purposes of section 432A as it applies in relation to an overseas life insurance company, income which falls within section 11(2)(aa) or (ab), and chargeable gains or allowable losses which fall within section 11(2)(d) or (e)—

• (a) shall not be referable to long-term business other than life assurance business; and

• (b) shall be apportioned under subsections (5) and (6) of that section separately from other income, gains and losses.

• (3) For the purposes of the application of section 432A(6) in relation to such income, gains or losses as are mentioned in sub-paragraph (2) above—

• (a) “liabilities” does not includes liabilities of the long-term business other than life assurance business;

• (b) the net value of assets directly referable to any category of business does not include assets directly referable to long-term business other than life assurance business; and

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

• (1) In subsection (1) of section 432B, the words “or treated as brought into account by virtue of paragraph 1C of Schedule 8A to the Finance Act 1989” shall be treated as inserted after the words ’brought into account, within the meaning of that section,’ .

• (2) The following words shall be treated as inserted at the end of subsection (2) of that section “ ; but this subsection shall not apply for a period of account in relation to which any provision of paragraph 1C of Schedule 8A to the Finance Act 1989 applies. ”

• (3) Subsection (3) of section 432B shall have effect as if after the words “with which an account is concerned” there were inserted the words “or in respect of which items are treated as brought into account by virtue of paragraph 1C of Schedule 8A to the Finance Act 1989”; and that subsection and sections 432C to 432E shall have effect as if the reference to relevant business were to relevant business of the branch or agency in the United Kingdom through which the company carries on life assurance business.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

• (1) In section 434, the following subsections shall be treated as inserted after subsection (1B)—

• (“) The exclusion from section 11(2)(a), (aa) or (ab) of distributions received from companies resident in the United Kingdom shall not apply in relation to—

• (a) the charge to corporation tax on the life assurance profits of an overseas life insurance company computed in accordance with the provisions of this Act applicable to Case I of Schedule D; or

• (b) any computation of such profits in accordance with those provisions.

• (1D) Paragraph 2 of Schedule F shall not have effect for the purposes of subsection (1C)(a) or (b) above, but this subsection shall not apply in relation to distributions in respect of which an overseas life insurance company is entitled to a tax credit under section 441A.

• (1E) The reference in subsection (1C) above to the life assurance profits of an overseas life insurance company is a reference to the profits of the company—

• (a) in respect of its life assurance business; or

• (b) in respect of any category of life assurance business which it carries on.”

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

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

9A

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

9B

The following section shall be treated as inserted after section 434A—

(434AA) An overseas life insurance company shall not be entitled to treat as paid out of profits or gains brought into charge to income tax any part of the annuities paid by the company which is referable to its life assurance business.

9C

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

10

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

10A

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

10AA

In section 440(2)(a), the reference to an insurance business transfer scheme shall be treated as including a reference to a qualifying overseas transfer (within the meaning of paragraph 4A above).

10B

• (1) Where the company mentioned in section 440(1) is an overseas life insurance company, section 440 has effect with the following modifications.

• (2) Subsection (4) shall be treated as if—

• (a) in paragraphs (a), (b), (d), (e) and (f) the words “UK assets” were substituted for the words “assets”; and

• (b) at the end there were inserted—

• (”) section 11C assets;

• (h) non-UK assets.”.

• (2A) The following subsection shall be treated as inserted after subsection (4)—

(4AA) Section 13 of the Capital Allowances Act (use for qualifying activity of plant or machinery provided for other purposes) shall apply in relation to any case in which an asset or part of an asset held by an overseas life insurance company— (a) ceases to be within the category set out in paragraph (h) of subsection (4) above; and (b) at the same time comes within another of the categories set out in that subsection..

• (3) The following subsection shall be treated as inserted at the end of the section—

• (”) For the purposes of this section—

• (a) UK assets are—

• (i) section 11(2)(b) assets;

• (ii) section 11(2)(c) assets; or

• (iii) assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;

• (b) section 11C assets are assets—

• (i) (in a case where section 11C (other than subsection (9)) applies) of the relevant fund, other than UK assets; or

• (ii) (in a case where that section including that subsection applies) of the relevant funds, other than UK assets;

• (c) non-UK assets are assets which are not UK assets or section 11C assets;

and any expression used in this subsection to which a meaning is given by section 11A has that meaning.”.

• (4) Where one of the companies mentioned in section 440(2) is an overseas life insurance company, section 440(2)(b) shall have effect as if for the words “is within another of those categories” there were substituted “is not within the corresponding category”.

• (5) Where the transferor company mentioned in section 440(2) is an overseas life insurance company, section 440 shall have effect, as regards the time immediately before the acquisition, with the modifications in sub-paragraphs (2) and (3) above.

• (6) Where the acquiring company mentioned in section 440(2) is an overseas life insurance company, section 440 shall have effect, as regards the time immediately after the acquisition, with the modifications in sub-paragraphs (2) and (3) above.

10C

• (1) In section 440B the following subsection shall be treated as substituted for subsection (3)—

• (”) Section 440(1) and (2) have effect as if the only categories specified in subsection (4) of that section were—

• (a) UK assets of the long-term insurance fund,

• (b) other UK assets,

• (c) section 11C assets, and

• (d) non-UK assets,

(those expressions having the meanings given by section 440(7)).”.

• (2) The following subsection shall be treated as substituted for subsection (4) of that section—

• (”) Section 440A applies as if for paragraphs (a) to (e) of subsection (2) there were substituted—

• (”) so many of the UK securities as are identified in the company’s records as securities by reference to the value of which there are to be determined benefits provided for under policies or contracts the effecting of all (or all but an insignificant proportion) of which constitutes the carrying on of long-term business, shall be treated for the purposes of corporation tax as a separate holding linked solely to that business,

• (b) any remaining UK securities shall be treated for those purposes as a separate holding which is not of the description mentioned in the preceding paragraph,

• (c) the section 11C securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs, and

• (d) the non-UK securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.”.

11

• (1) In section 440A(2), in paragraph (a) the words “UK securities” shall be treated as substituted for the word “securities” in the first place where it occurs.

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

• (3) In paragraphs (d) and (e) of that subsection, the words “UK securities”shall be treated as substituted for the word “securities”

• (4) The following paragraphs shall be treated as inserted at the end of that subsection—

• (“) the section 11C securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs; and

• (g) the non-UK securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.”

• (5) The following subsection shall be treated as inserted after subsection (6) of that section—

• (“) For the purposes of this section—

• (a) UK securities are such securities as are—

• (i) section 11(2)(b) assets;

• (ii) section 11(2)(c) assets; or

• (iii) assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;

• (b) section 11C securities are securities—

• (i) (in a case where section 11C (other than subsection (9)) applies) which are assets of the relevant fund, other than UK securities; or

• (ii) (in a case where that section including that subsection applies) which are assets of the relevant funds, other than UK securities;

• (c) non-UK securities are securities which are not UK securities or section 11C securities;

and any expression used in this subsection to which a meaning is given by section 11A has that meaning.”

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11A

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

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

11B

In section 442A the following subsection shall be treated as inserted after subsection (6)—

• (”) In the case of an overseas life insurance company, the investment return treated as accruing under this section in any accounting period in relation to a policy or contract shall be treated as chargeable profits within section 11(2) of the Taxes Act 1988 where the policy or contract is one which in that accounting period gives rise, or but for the reinsurance arrangement would give rise, to such profits.”.

11C

In sections 444A(1) and 460(10A), the references to an insurance business transfer scheme shall be treated as including references to a qualifying overseas transfer (within the meaning of paragraph 4A above).

12

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

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

13

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

• (2) The following subsection shall be treated as inserted after subsection (2) of section 794—

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) In relation to any item of income falling within section 11(2)(ab), or any chargeable gain falling within section 11(2)(e), the reference in subsection (2)(bb) above to tax paid shall be construed as a reference to that part of the tax paid which bears to the whole of the tax paid the same proportion as that item of income, or that chargeable gain, bears to the relevant income, or relevant gain, by reference to which that item of income, or that chargeable gain, is, by virtue of section 11C, calculated; and, in relation to any such item of income or any such chargeable gain, the reference in section 790(4) to tax paid shall be construed accordingly.

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

14

• (1) In subsection (1) of section 811, the words “subsections (1A) and (2)”shall be treated as substituted for the words “subsection (2)”.

• (2) The following subsection shall be treated as inserted after that subsection—

• (“) In relation to any item of income falling within section 11(2)(ab), the reference in subsection (1) above to any sum which has been paid in respect of tax on that income shall be construed as a reference to the part of that sum which bears to the whole of that sum the same proportion as that item of income bears to the relevant income by reference to which that item of income is, by virtue of section 11C, calculated.”

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

14A

• (1) In Schedule 19AA, paragraph 5(5)(c) (and the reference to it in paragraph 2(3) of that Schedule) shall be treated as omitted.

• (2) The following paragraph shall be treated as inserted at the end of that Schedule—

(6) In its application to an overseas life insurance company this Schedule shall have effect as if— (a) the references in paragraphs 2 and 3 to assets of the long-term insurance fund were to such of the assets as are— (i) section 11(2)(b) assets; (ii) section 11(2)(c) assets; or (iii) assets which by virtue of section 11B are attributed to the branch or agency in the United Kingdom through which the company carries on life assurance business;. . . (b) the references in paragraphs 2 and 4 to the liabilities of the company’s long-term business were to such of those liabilities as are attributable to the branch or agency; and (c) the references in paragraph 4 to any liabilities of the company’s long-term insurance fund which represent a money debt were to any such of those liabilities as are attributable to the branch or agency; and any expression used in this paragraph to which a meaning is given by section 11A has that meaning..

15

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

SCHEDULE 19A

Preliminary

1

• (1) In this Schedule—

• (a) the person who was acting as underwriting agent for that syndicate at the end of the corresponding underwriting year; or

• (b) such other person as may be determined in accordance with regulations made by the Board by statutory instrument;

• “closing year”, in relation to a year of assessment, means the year of assessment next but one following that year;

• “inspector” includes any officer of the Board;

• “managing agent”, in relation to a syndicate and a year of assessment, means—

• (a) the person registered as a managing agent at Lloyd’s who was acting as such for the syndicate at the end of the corresponding underwriting year, or

• (b) such other person as may be determined in accordance with regulations made by the Board;

• “members’ agent”, in relation to a member of a syndicate and a year of assessment, means—

• (a) the person registered as a members’ agent at Lloyd’s who was acting as such for that member at the end of the corresponding underwriting year, or

• (b) if there was more than one such person acting as a members’ agent for that member at that time—

• (i) the person who was so acting at that time and was appointed by the member to be responsible for complying with the requirements of this Schedule and of any regulations made under section 451(1) or (1A) in connection with tax charged in accordance with section 450 on the profits of all the syndicates of which he was a member, or

• (ii) if no such person was so appointed, the person who was so acting at that time for the member in his capacity as a member of that syndicate, or

• (c) such other person as may be determined in accordance with regulations made by the Board;

• “member’s profit or loss”, in relation to a member of a syndicate, means the aggregate amount of the profits or losses, as shown in the accounts of each syndicate of which he is a member and in relation to which he has the same members’ agent, arising to the member from each such syndicate (taken together) and “member’s profits” and “member’s losses” shall be construed accordingly;

• “profits” includes gains;

• “syndicate” means a syndicate of underwriting members of Lloyd’s formed for an underwriting year;

• “syndicate profit or loss”, in relation to a syndicate, means the aggregate amount of the profits or losses arising to all the members of the syndicate (taken together), and “syndicate profits” and “syndicate losses” shall be construed accordingly.

• (2) References in this Schedule to profits or losses arising to a member of a syndicate are references to profits or losses which—

• (a) arise to him in his capacity as such a member, whether from his underwriting business or from assets forming part of a premiums trust fund; and

• (b) are chargeable or, as the case may be, allowable under Case I of Schedule D.

• (3) Regulations under this paragraph may make provision with respect to the year of assessment next but one preceding the year of assessment in which they are made.

Returns by managing agent

2

• (1) An inspector may, at any time after the end of the closing year for a year of assessment, by notice in writing to the managing agent require him to deliver to the inspector, on or before the final day determined under sub-paragraph (2) below, a return of the syndicate profit or loss for the year of assessment—

• (a) containing such information as may be required in pursuance of the notice; and

• (b) accompanied by such accounts, statements and reports as may be so required.

• (2) The final day for the delivery of any return required by a notice under sub-paragraph (1) above is whichever is the later of—

• (a) the 1st September next following the end of the closing year for the year of assessment; and

• (b) the end of the period of three months beginning on the day following that on which the notice was served.

• (3) If the managing agent, having been required by a notice under sub-paragraph (1) above to deliver a return, fails to deliver the return on or before the final date for its delivery, he shall be liable to a penalty equal to the prescribed amount multiplied by the number of days on which the failure continues; and in this sub-paragraph “the prescribed amount” means £60 for each fifty members of the syndicate (counting any number of members less than fifty, and any number left over, as fifty).

• (4) If the managing agent fraudulently or negligently delivers an incorrect return under sub-paragraph (1) above, he shall be liable to a penalty not exceeding the prescribed amount multiplied by the number of members of the syndicate; and in this sub-paragraph “the prescribed amount” means £3,000.

• (5) In relation to a return required by a notice under sub-paragraph (1) above—

• (a) any reference in sub-paragraph (2) or (3) above to the delivery of the return is a reference to its delivery together with the accompanying documents referred to in sub-paragraph (1) above; and

• (b) the reference in sub-paragraph (4) above to the return being incorrect includes a reference to any of those documents being incorrect.

Repayment claims by managing agent

2A

• (1) In relation to an underwriting year a managing agent may, by notice in writing at any time during the period of six years beginning with 1st March in the closing year for that year, make a claim to the inspector for the repayment of tax suffered by way of deduction on the syndicate investment income allocated to that year in accordance with the rules or practice of Lloyd’s.

• (2) The managing agent shall provide such information in support of the claim as the inspector may reasonably require.

• (3) Where an amount is repaid to the managing agent under this paragraph, he shall apportion the amount repaid between the members of the syndicate in proportion to their interests in that part of the syndicate investment income which has suffered tax by way of deduction and, where there is a syndicate profit available for distribution to the members, shall pay the amount so apportioned to the members’ agent in relation to each member within 90 days of receipt.

• (4) The provisions of section 824 shall not apply to any repayment of tax made under this paragraph.

Returns by members’ agent

2B

• (1) An inspector may, at any time after the end of the closing year for that year of assessment, by notice in writing to the members’ agent require him to deliver to the inspector, on or before the final day determined under sub-paragraph (3) below, a return of the member’s profit for the year of assessment in respect of those syndicates in relation to which he is the members’ agent of the member—

• (a) containing such information as may be required in pursuance of the notice, and

• (b) accompanied by such statements and reports as may be so required, and

• (c) containing a statement of the amount of tax which would be payable on that profit if income tax were payable on the whole of it at the basic rate in force for the year of assessment.

• (2) For the purposes of the return by the members’ agent of the member’s profit—

• (a) there shall be added to that profit an amount representing the depreciation in value for the year of assessment of assets forming part of a premiums trust fund, and

• (b) there may be deducted from that profit—

• (i) an amount representing the appreciation in value for the year of assessment of assets forming part of a premiums trust fund.

• (ii) an amount in respect of disbursements and expenses wholly and exclusively laid out for the purposes of the member’s underwriting business, and of any premium paid by the member on an insurance against losses in his underwriting business, where that amount is claimed in the member’s return for the year of assessment as being deductible from that profit.

• (3) The final day for the delivery of any return required by a notice under sub-paragraph (1) above is whichever is the later of—

• (a) 1st October in the year of assessment following the closing year for the year of assessment; and

• (b) the end of the period of three months beginning on the day following that on which the notice was served.

• (4) If the members’ agent, having been required by a notice under sub-paragraph (1) above to deliver a return, fails to deliver the return on or before the final day for its delivery, he shall be liable to a penalty equal to the prescribed amount multiplied by the number of days on which the failure continues; and in this sub-paragraph “the prescribed amount” means £60 for each fifty members for whom he acts and in respect of whom there is such a failure (counting any number of such members less than fifty, and any number left over, as fifty).

• (5) If the members’ agent fraudulently or negligently delivers an incorrect return under sub-paragraph (1) above, he shall be liable to a penalty not exceeding the prescribed amount multiplied by the number of members for whom he acts and in respect of whose returns there is such fraud or negligence; and in this sub-paragraph “the prescribed amount” means £3,000.

• (6) In relation to a return required by a notice under sub-paragraph (1) above—

• (a) any reference in sub-paragraph (1) or (3) above to the delivery of the return is a reference to its delivery together with the accompanying documents referred to in sub-paragraph (1) above; and

• (b) the reference in sub-paragraph (5) above to the return being incorrect includes a reference to any of those documents being incorrect.

Payments on account of tax

3

• (1) In the case of a member’s profit for a year of assessment, the members’ agent shall, on or before the 1st January next following the end of the closing year for that year, pay to the collector, on account of the member’s liability to tax, the amount stated in his return for that year under paragraph 2B(1)(c) above.

• (2) Where an amount is paid to the collector under sub-paragraph (1) above for a year of assessment, the following provisions shall apply as between a member and that members’ agent—

• (a) where the amount so paid exceeds the amount deducted by the members’ agent in accounting to the member for that member’s profit, the amount of the excess shall be paid by the member to the members’ agent; and

• (b) where the amount so paid is less than the amount deducted by the members’ agent in accounting to the member for that member’s profit, the amount of the excess shall be paid by the members’ agent to the member.

• (3) Where an amount is paid to the collector under sub-paragraph (1) above for a year of assessment, the following provisions shall apply as respects the member’s liability to tax for that year—

• (a) where the amount in which the member is charged to tax exceeds the amount so paid, the amount of the excess shall be the amount of tax due and payable; and

• (b) where that amount exceeds the amount in which the member is so charged, the amount of the excess shall be treated as tax overpaid.

• (4) Any amount which is payable under sub-paragraph (1) above shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from the date when it becomes payable until payment, whether or not that date is a non-business day within the meaning of the Bills of Exchange Act 1882, and section 90 of the Taxes Management Act 1970 shall apply for the purposes of this paragraph as it applies for the purposes of any provision of Part IX of that Act.

Assessments on members’ agent

3A

• (1) If the members’ agent delivers a return in accordance with paragraph 2B above but does not pay to the collector the amount of tax stated in the return in accordance with paragraph 3 above, the inspector may make an assessment on the members’ agent in that amount whether or not it has been paid when the assessment is made.

• (2) If for a year of assessment the inspector is dissatisfied with a return under paragraph 2B above, or there is no such return, he may make an assessment on the members’ agent to the best of his judgment.

• (3) Any income tax due under an assessment made by virtue of sub-paragraph (1) or (2) above shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

Determinations by inspector

4

• (1) If the inspector is satisfied that a return under paragraph 2(1) above affords correct and complete information concerning the syndicate profit or loss for a year of assessment, he shall determine that profit or loss accordingly.

• (2) If for a year of assessment the inspector is dissatisfied with a return under paragraph 2(1) above, or there is no such return, the inspector shall determine the syndicate profit or loss for that year to the best of his judgment.

• (3) If the inspector discovers that a determination under sub-paragraph (1) or (2) above—

• (a) understates the syndicate profits for the year of assessment; or

• (b) overstates the syndicate losses for that year,

he may, by a determination under this sub-paragraph, vary the first-mentioned determination accordingly.

• (4) Notice of a determination under this paragraph shall be served on the [managing ] agent and shall state the time within which any appeal against the determination may be made under paragraph 5 below.

• (5) After notice of a determination under this paragraph has been served on the [managing ] agent, the determination shall not be altered except in accordance with the express provisions of the Taxes Acts.

Appeals

5

• (1) The [managing ] agent may appeal against a determination under paragraph 4 above by a notice of appeal in writing given to the inspector within thirty days after the date of the notice of determination.

• (2) An appeal under this paragraph shall be to the General Commissioners, except that the [managing ] agent may elect (in accordance with section 46(1) of the Taxes Management Act 1970) to bring the appeal before the Special Commissioners instead of the General Commissioners; and subsections (5) to (5E) of section 31 of that Act shall apply for the purposes of an election under this sub-paragraph as they apply for the purposes of an election under subsection (4) of that section.

Modification of determinations pending appeal

6

• (1) Where the [managing ] agent appeals against a determination under paragraph 4 above, then, for the purpose of establishing, in the event of a member of the syndicate appealing against an assessment made on him, the amount of tax the payment of which should, pending the determination of that appeal, be postponed under section 55 of the Taxes Management Act 1970, that section shall apply to the first-mentioned appeal with the modifications specified in sub-paragraph (2) below.

• (2) The modifications are as follows—

• (a) any reference to the notice of assessment shall be construed as a reference to the notice of determination;

• (b) any reference to the appellant believing that he is overcharged to tax by the assessment shall be construed as a reference to him believing that the determination overstates the syndicate profits, or understates the syndicate losses, for the year of assessment, and any reference to the appellant having grounds for so believing, or there being reasonable grounds for so believing, shall be construed accordingly;

• (c) any reference to a determination of the amount of tax the payment of which should be postponed pending the determination of the appeal shall be construed as a reference to a direction that the determination shall, pending the determination of the appeal, have effect for the purpose stated in sub-paragraph (1) above as if the syndicate profits there stated were reduced, or the syndicate losses there stated were increased, by such amount as may be specified in the direction, and any reference to an amount of tax so determined, or to the amount of tax which should be so postponed, shall be construed accordingly; and

• (d) subsections (2) and (9) and, in subsection (6), paragraphs (a) and (b) and the word “and” immediately preceding paragraph (a) shall be omitted.

Apportionments of syndicate profit or loss

7

• (1) Where a determination of a syndicate profit or loss for a year of assessment is made, varied or modified (whether under the foregoing provisions of this Schedule or on appeal), the inspector may, by notice in writing to the [managing ] agent, require him to make to the inspector, within the specified period, a return apportioning, between the members of the syndicate, the syndicate profit or loss as stated in the determination as so made, varied or modified.

• (2) If the [managing ] agent, having been required by a notice under sub-paragraph (1) above to deliver a return within the specified period, fails to deliver the return within that period, he shall be liable to a penalty equal to the prescribed amount multiplied by the number of days on which the failure continues; and in this sub-paragraph “the prescribed amount” means £5 for each fifty members of the syndicate (counting any number of members left over as fifty).

• (3) In this paragraph “the specified period” means such period, not being less than thirty days and beginning with the day following the date of the notice under sub-paragraph (1) above, as may be specified in that notice.

Individual members: effect of determinations

8

• (1) A determination of a syndicate profit or loss for a year of assessment (whether as originally made or as varied or modified) shall, for the purpose of determining the liability to tax of each member of the syndicate, be conclusive against that member that the syndicate profit or loss for that year is as there stated.

• (2) Where a determination of a syndicate profit or loss for a year of assessment is varied or modified at any time after the issue of a notice of assessment assessing any member of the syndicate to tax—

• (a) section 31 of the Taxes Management Act 1970 (right of appeal) and section 55 of that Act (postponement of tax) shall have effect, in relation to that member, as if any reference to the date of the notice of assessment, or the date of the issue of the notice of assessment, were a reference to the date of the variation or modification; and

• (b) in the case of a variation, an assessment which gives effect to the determination as varied shall not be out of time if it is made within one year of the date of the variation.

• (3) Sub-paragraph (2)(b) above shall not apply in the case of a variation under paragraph 4(3) above which is made later than six years after the end of the closing year.

Assessment of individual members: time limits

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For the purposes of sections 36, of the Taxes Management Act 1970 (extension of time in cases of [fraudulent or negligent conduct ], anything done or omitted to be done by the [managing ] agent shall be deemed to have been done or omitted to be done by each member of the syndicate.

Supplemental: penalties

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• (1) If it appears to an inspector or the Board that the agent is liable to a penalty under paragraph 2(3)or 7(2)above, the amount appearing to be due may be assessed by the inspector or the Board as if it were tax for the year of assessment in which the failure to make the return occurred; and, subject to the provisions of this paragraph, the provisions of the Taxes Management Act 1970relating to the assessment and collection of tax shall apply accordingly.

• (2) An amount assessed by way of penalty under paragraph 2(3)or 7(2)above shall be due at the end of the period of thirty days beginning with the date of the issue of the notice of assessment.

• (3) On an appeal against an assessment of an amount by way of penalty under sub-paragraphs (3)of paragraph 2or sub-paragraph (2)of paragraph 7above, subsections (6)to (8)of section 50of that Act shall not apply but the Commissioners—

• (a) may confirm the amount of the assessment or, if it appears to them that the amount assessed is greater or smaller than the penalty provided for under that sub-paragraph, may reduce it or increase it to such an amount as is appropriate having regard to the provisions of that sub-paragraph; and

• (b) if it appears to them that no penalty has been incurred, may set the assessment aside.

• (4) Where an amount has been assessed by way of penalty under sub-paragraph (3)of paragraph 2or sub-paragraph (2)of paragraph 7above and either no appeal has been brought against that assessment or the amount assessed has been confirmed or varied on appeal—

• (a) a certificate of an inspector or other officer of the Board that an amount is due by way of penalty under that sub-paragraph; and

• (b) a certificate of a collector that payment of that amount has not been made to him or, to the best of his knowledge and belief, to any other collector, or to a person acting on his behalf or on behalf of another collector,

shall be sufficient evidence that the amount mentioned in the certificates is unpaid and is due to the Crown; and any document purporting to be such a certificate as is mentioned in this sub-paragraph shall be deemed to be such a certificate unless the contrary is proved.

• (5) Section 100of the Taxes Management Act 1970 (procedure for recovery of penalties)shall not apply to a penalty under paragraph 2(3)or 7(2)above.

Supplemental: interest

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• (1) Interest charged under paragraph 3(4)above shall be treated for the purposes of the enactments mentioned in section 69of the Taxes Management Act 1970 (interest on tax)as if it were tax charged and due and payable under an assessment.