The Non-resident Companies (General Insurance Business) Regulations 1999

Amendments to the Insurance Companies (Reserves) (Tax) Regulations 1996

7.—(1) The Insurance Companies (Reserves) (Tax) Regulations 1996(1) shall be amended as follows.

(2) In regulation 8(1) there shall be inserted at the beginning “Subject to regulation 8B,”.

(3) After regulation 8 there shall be inserted–

“Certain insurance business carried on outside the United Kingdom by a controlled foreign company—non-annual accounts but returns prepared on an annual basis

8A.— (1) Subject to regulation 8B, this regulation applies in any case where–

(a) paragraphs (1) and (2) of regulation 8 apply in respect of an accounting period of a controlled foreign company,

(b) the statutory accounts drawn up by the controlled foreign company for that period use a paragraph 52 method of accounting on a non-annual basis, but

(c) returns of chargeable profits of that company for that period are based on accounts prepared on an annual basis.

(2) Paragraph (3) of regulation 8 shall apply in relation to this regulation as it applies in relation to that regulation.

(3) Section 444BA shall have effect, subject to the modifications specified in paragraph (5) of regulation 8 and in paragraph (4) of this regulation, in relation to the equalisation reserve included in the statutory accounts as it has effect in relation to equalisation reserves maintained by virtue of section 34A regulations(2).

(4) The operation of paragraphs (a) and (b) of subsection (2) of section 444BA shall be modified so as to provide that, for the purposes of the Tax Acts, the amounts which are transferred into or out of the equalisation reserve in respect of the controlled foreign company’s business for the accounting period in question shall be the amounts which would have been transferred into or out of the equalisation reserve if the company had been required to maintain an equalisation reserve by reference to accounts prepared on an accident year basis.

(5) The reference in paragraph (1)(c) to accounts prepared on an annual basis shall be construed in accordance with regulation 5(3).

(6) The reference in paragraph (4) to accounts prepared on an accident year basis shall be construed in accordance with regulation 5(4).

Disapplication of regulations 8 and 8A where controlled foreign company prepares non-annual accounts and final replacement of the technical provision does not take place in conformity with the Companies Act

8B.   Regulations 8 and 8A shall not apply in any case where for an accounting period a controlled foreign company–

(a) draws up its statutory accounts for that period using a paragraph 52 method of accounting on a non-annual basis, and

(b) the final replacement of the technical provision, as described in sub-paragraph (4) of that paragraph, does not take place on or before the end of the year referred to in that sub-paragraph as the third year following the underwriting year.”

(1)

S.I. 1996/2991.

(2)

Section 34A of the Insurance Companies Act 1982 (c. 50) was inserted by section 1 of the Insurance Companies (Reserves) Act 1995 (c. 29).