16(1)Section 213 of the Taxation of Chargeable Gains Act 1992 (c. 12) (spreading of gains and losses under section 212) is amended as follows.U.K.
(2)In subsection (3)—
(a)for “subsection (3A)” substitute “ subsection (8H) ”,
(b)in paragraph (b), for “one of the next 6” substitute “ either of the next 2 ” and for “subsection” substitute “ section ”,
(c)in paragraph (c), for “any intervening accounting period” substitute “ the intervening accounting period (if there is one) ”, and
(d)in paragraph (ca), for “none of the intervening accounting periods is” substitute “ the intervening accounting period (if there is one) is not ”.
(3)Omit subsections (3A) and (3B).
(4)For subsection (5) substitute—
“(4A)The following provisions apply where an insurance business transfer scheme has effect to transfer business which consists of the effecting or carrying out of contracts of long-term insurance from one person (“the transferor”) to another (“the transferee”).
(5)Subject to subsections (5A) to (7) below, any chargeable gain or allowable loss which (assuming that the transferor had continued to carry on the business transferred) would have accrued to the transferor by virtue of subsection (1) above after the transfer shall instead be deemed to accrue to the transferee.”.
(5)After subsection (8) insert—
“(8A)Subsection (8B) below applies where—
(a)immediately before the transfer the transferee did not carry on business consisting of the effecting or carrying out of contracts of long-term insurance,
(b)the transferor and the transferee are, at the time of the transfer, members of the same group,
(c)the net amount for the accounting period of the transferor ending with the day of the transfer, or for the immediately preceding accounting period of the transferor, (“the relevant pre-transfer period of the transferor”) represents an excess of gains over losses,
(d)the net amount for the accounting period of the transferee in which the transfer takes place, or for the immediately following accounting period of the transferee, (“the relevant post-transfer period of the transferee”) represents an excess of losses over gains (after taking account of any reductions made by virtue of this section), and
(e)within 2 years after the end of the relevant post-transfer period of the transferee, the transferor and the transferee make a joint election in respect of the whole or part of the net amount for that period by notice to an officer of the Board.
(8B)Subject to subsections (8C) to (8E) and (8H) below, the net amounts for both the relevant pre-transfer period of the transferor and the relevant post-transfer period of the transferee shall be reduced by the amount in respect of which the election is made.
(8C)Subsection (8B) above does not apply if—
(a)the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and
(b)the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer.
(8D)If—
(a)the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and
(b)the relevant pre-transfer period of the transferor is the accounting period ending with the day of the transfer,
subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferee in which the transfer takes place.
(8E)If—
(a)the relevant post-transfer period of the transferee is the accounting period in which the transfer takes place, and
(b)the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer,
subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferor ending with the day of the transfer.
(8F)The conditions referred to in subsections (8D) and (8E) above are that—
(a)there is (after taking account of any reductions made by virtue of this section) no net amount for the accounting period, and
(b)the company whose accounting period it is did not join a group of companies in the accounting period.
(8G)A copy of the notice containing an election under subsection (8A)(e) above must accompany the tax return for the relevant post-transfer period of the transferee; and paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.
(8H)Subsections (3) and (8A) and (8B) above have effect where the company, or the transferee, in question joins a group of companies in the accounting period for which the net amount represents an excess of losses over gains as if a claim or election could not be made in respect of that net amount except to the extent (if any) that the net amount is an amount which, assuming there to be gains accruing to the company or transferee immediately after the beginning of that period, would fall to be treated under paragraph 4 of Schedule 7AA as a qualifying loss in relation to those gains.
((8I))References in this section to a company joining a group of companies are to be construed in accordance with paragraph 1 of Schedule 7AA as if those references were contained in that Schedule; and in subsection (8A)(b) above “group” has the same meaning as in that Schedule.”.
(6)This paragraph has effect where the accounting period for which the net amount represents an excess of losses over gains is an accounting period beginning on or after 1st January 2003.