Finance Act, 1991

Amendment of section 35 (profits of life business) of Corporation Tax Act, 1976.

30.—(1) Section 35 of the Corporation Tax Act, 1976 , is hereby amended as respects any accounting period ending on or after the 31st day of December, 1990:

(a) by the addition after subsection (1) of the following subsection:

“(1A) Where a company's trading operations consist solely of a foreign life assurance business as defined in paragraph (a) of subsection (4) of section 36 of the Finance Act, 1988 , then—

(a) subject to the following provisions of this subsection, the company shall be chargeable to tax in respect of the profits of that business under Case I of Schedule D,

(b) notwithstanding paragraph (b) of subsection (1), where any part of those profits would, apart from this paragraph, be excluded in computing the income chargeable under Case I of Schedule D solely by virtue of that part being reserved for policyholders or annuitants, that part shall not be excluded in computing the income so chargeable,

(c) the charge to tax under Schedule D of income from investments (hereafter in this subsection referred to as ‘shareholders' investments’), which are not investments of any fund representing the amount of the liability of the company in respect of its business with policyholders and annuitants, shall not be under Case I of that Schedule, and

(d) notwithstanding section 33, section 15 shall apply for computing the profits of the company as respects expenses of management, including commissions, to the extent that those expenses—

(i) are disbursed for the purposes of managing shareholders’ investments, and

(ii) would not, apart from this paragraph, be deductible in computing the profits, or any description of profits, of the company for the purposes of corporation tax.”,

and

(b) by the addition after subsection (2) of the following subsection:

“(3) Where, under the provisions of section 25 (1) of the Insurance Act, 1989 , an assurance company amalgamates its industrial assurance and life assurance funds, subsection (2) shall not apply to that company for any accounting period ending on or after the completion of the amalgamation and before the recommencement, if any, of a separate industrial assurance or life assurance fund:

Provided that, for the purposes of applying section 33, in so far as it is affected by—

(a) management expenses or charges on income which, apart from section 15 (2), would be treated as, respectively, incurred for, or paid in, an accounting period ending before the day on which the amalgamation is completed, or

(b) any loss incurred in such a period,

to a company which has amalgamated its industrial assurance and life assurance funds, subsection (2) shall apply as if the company had not amalgamated its funds.”.

(2) For the purposes of subsection (3) (inserted by this section) of section 35 of the Corporation Tax Act, 1976 , and subsection (1), where an accounting period of an assurance company begins before the day (hereafter in this subsection referred to as “the day of amalgamation”) on which the company completes the amalgamation of its industrial assurance and life assurance funds, and ends on or after the day of amalgamation, that period shall be divided into one part beginning on the day on which the accounting period begins and ending on the day before the day of amalgamation and another part beginning on the day of amalgamation and ending on the day on which the accounting period ends, and both parts of the accounting period shall be treated as if they were separate accounting periods.