Regulation 5 Substitution of paragraph 1(5) of Schedule 19AB where regulation 4 applies

Paragraph (2) substitutes the following sub-paragraphs for sub-paragraph (5) of paragraph 1 of Schedule 19AB in circumstances where regulation 4(2) applies.

For sub-paragraph (5) there shall be substituted–

“(5)

In sub-paragraph (1)(a) and (b) above “the appropriate portion” means–

(a)

where the payment or distribution in question is income arising from–

(i)

assets linked to tax exempt basic life assurance and general annuity business or to tax exempt class IV business, or

(ii)

assets other than those of the society’s long term business fund,

the whole;

(b)

where the payment or distribution in question is income arising from assets of the society’s overseas life assurance fund, the fraction whose numerator is the mean of the opening and closing liabilities to policyholders in respect of the society’s tax exempt overseas life assurance business and whose denominator is the mean of the opening and closing liabilities to policyholders in respect of the whole of the society’s overseas life assurance business;

(c)

if and to the extent that the payment or distribution in question is income arising from assets of the society’s long term business fund but is not referable to a category of business by virtue of subsection (3) or (4) of section 432A^f1, the provisional fraction;

(d)

except as provided by paragraph (a), (b) or (c) above, none.

(5A)

In sub-paragraph (1)(c) above “the appropriate portion” means–

(a)

where the distribution in question is income arising from assets linked to tax exempt basic life assurance and general annuity business or to tax exempt class IV business the profits of which are exempt from tax by virtue of section 460(1) (“section 460(1) exempt business”), the whole;

(b)

where the distribution in question is income arising from assets of the society’s overseas life assurance fund, the fraction whose numerator is the mean of the opening and closing liabilities to policyholders in respect of the society’s tax exempt overseas life assurance business and whose denominator is the opening and closing liabilities to policyholders in respect of the whole of the society’s overseas life assurance business;

(c)

if and to the extent that the distribution in question is income arising from assets of the society’s long term business fund but, on the assumption that section 460(1) exempt business were a separate category of business within section 432A, is not referable to a category of business by virtue of subsection (3) or (4) of that section, the provisional fraction;

(d)

except as provided by paragraph (a), (b) or (c) above, none.

(5B)

In determining the provisional fraction for the purposes of sub-paragraph (5)(c) above, tax exempt basic life assurance and general annuity business and tax exempt class IV business shall be taken to be a single category of business for the purposes of section 432A(5).

(5C)

In determining the provisional fraction for the purposes of sub-paragraph (5A)(c) above, tax exempt basic life assurance and general annuity business and section 460(1) exempt business shall be taken to be a single category for the purposes of section 432A(5).

(5D)

In sub-paragraphs (5) and (5A) above references to assets of the society’s long term business fund–

(a)

as respects societies to which regulation 13(1) of the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997^f2 applies, shall be construed in accordance with the definition in subsection (11) of section 432A, read with subsections (12) to (14) of that section, as those subsections are added by regulation 13(5) of those Regulations;

(b)

as respects other societies, shall be construed in accordance with the definitions of “long term business” (as substituted by regulation 6(4) of those Regulations) and “long term business fund” in section 431(2)^f3.

(5E)

In sub-paragraphs (5) to (5C) above–

• “tax exempt basic life assurance and general annuity business” shall be construed in accordance with the definition inserted in section 431(2) by regulation 6(2) of the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997;

• “tax exempt class IV business” shall be construed in accordance with the definition inserted in section 431(2) by regulation 7(2) of those Regulations;

• “tax exempt overseas life assurance business” shall be construed in accordance with section 441(4D)^f4.”