Regulation 6 Modifications of the Income and Corporation Taxes Act

Modify section 431(2)^f1 (interpretative provisions relating to insurance companies) as follows.

In the definition of “insurance company”—

In the definition of “overseas life insurance company” for “branch or agency” substitute “permanent establishment”.

Substitute the following definitions in the appropriate places—

• ““liabilities”, where the company concerned is an overseas life insurance company, does not include liabilities that have been reinsured, and (subject to that) means—

  1. (a)

     the long-term liabilities of the company determined for the purposes of the company’s periodical return on actuarial principles in accordance with section 5.6 of the Prudential Sourcebook (Insurers), or

  2. (b)

     in the case of liabilities not determined for the purposes of such a periodical return, liabilities as determined in accordance with actuarial principles for the purposes of any return equivalent to a periodical return and required to be made by the company under the law of the territory in which the company is resident;”

• ““value”, in relation to assets and where the company concerned is an overseas life insurance company, means—

  1. (a)

     their value as taken into account for the purposes of the company’s periodical return, or

  2. (b)

     where their value is not taken into account for the purposes of such a periodical return, their value as taken into account for the purposes of any return equivalent to a periodical return and required to be made by the company under the law of the territory in which the company is resident;”;

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

  1. (a)

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

  2. (b)

     a qualifying overseas transfer;”.

Insert the following definitions in the appropriate places—

• ““free assets amount”, in relation to an overseas life insurance company, means the excess of the value of the relevant assets over the aggregate of the relevant liabilities and the amount of the shareholders’ excess assets, and for the purposes of this definition—

  1. (a)

     relevant assets are such assets of the company’s long-term insurance fund as fall to be attributed, for the purposes of section 11AA(2), to the permanent establishment in the United Kingdom through which the company carries on long-term business;

  2. (b)

     relevant liabilities are—

     1. (i)

        such liabilities of the long-term business as fall to be attributed, for the purposes of section 11AA(2), to the permanent establishment; and

     2. (ii)

        any money debts (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company which are not within sub-paragraph (i) above but which are owed in respect of that business and fall to be attributed, for the purposes of section 11AA(2), to the permanent establishment; and

  3. (c)

     the amount of the shareholders’ excess assets has the meaning given by section 432A(8)(b);”;

• ““IAD accounts” means the 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);”;

• ““long-term insurance fund”, in the case of an overseas life insurance company where the company is an EEA firm or a Treaty firm, means the technical account for life assurance business of the company included in the IAD 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 the technical account;”;

• ““periodical return” means, in relation to an overseas life insurance company, where the company is an EEA firm or a Treaty firm, the IAD accounts;”;

• ““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 permanent establishment in the United Kingdom as takes place in accordance with any authorisation granted outside the United Kingdom for the purposes of Article 14 of the Council Directive of 5th November 2002 concerning life assurance (No.2002/83/EC);”.