7(1)Section 85 of the Finance Act 1989 (c. 26) is amended as follows.
(2)In subsection (2) (receipts excluded from subsection (1) omit paragraphs (c) to (d).
(3)After subsection (2) insert—
“(2A)Receipts falling within subsection (1) above are to be taken into account for the purposes of corporation tax when they are brought into account.
Subsection (6) of section 89 (meaning of “brought into account”) shall also apply for the purposes of this section.
(2B)Expenses fall to be deducted from receipts falling within subsection (1) above in accordance with the provisions of the Corporation Tax Acts applicable to Case VI of Schedule D.
(2C)For the purposes of subsection (1) above, a receipt is referable to basic life assurance and general annuity business if—
(a)in the case of a repayment or refund of acquisition expenses, the acquisition expenses fell within section 86 below,
(b)in the case of a reinsurance commission, the policy or contract reinsured under the arrangement in respect of which the commission is paid constitutes basic life assurance and general annuity business, and
(c)in any other case, it is income which, if it were income from an asset, would by virtue of section 432A of the Taxes Act 1988 (apportionment of insurance companies' income) be referable to basic life assurance and general annuity business.”.