The Friendly Societies (Gilt-edged Securities) (Periodic Accounting for Tax on Interest) Regulations 1999

Modifications of the Friendly Societies Regulations

6.  After regulation 8 there shall be inserted the following regulation–

Modifications of paragraph 1A of Schedule 19AB

8A.— (1) Paragraphs (2) to (10) specify modifications of paragraph 1A of Schedule 19AB(1) in relation to exempt business of a friendly society.

(2) In sub-paragraph (1)–

(a) for the words “An insurance company carrying on pension business” there shall be substituted the words “A friendly society carrying on both tax exempt business and business other than tax exempt business”;

(b) for the words “its pension business” there shall be substituted the words “its tax exempt business”.

(3) For sub-paragraph (2) there shall be substituted the following sub-paragraph–

“(2) No repayment shall be made to a society in respect of any claim to a notional repayment; but the notional repayment shall be taken to be the amount of tax referred to in regulation 3(1) of the Friendly Societies (Gilt-edged Securities) (Periodic Accounting for Tax on Interest) Regulations 1999.”

(4) In sub-paragraph (3)–

(a) for the words “a company” there shall be substituted the words “a society”;

(b) for paragraphs (a) and (b) there shall be substituted the following paragraphs–

“(a) shall begin whenever–

(i) the society begins, at a time when it is carrying on only tax exempt business, to carry on business other than tax exempt business;

(ii) the society begins, at a time when it is carrying on only business other than tax exempt business, to carry on tax exempt business; or

(iii) the accounting period of the society beginning before 1st April 1999 and ending on or after 1st July 1999 begins, at a time when the society is carrying on both tax exempt business and business other than tax exempt business; and

(b) shall end on 31st March 1999.”

(5) In sub-paragraph (5) for the word “company” (wherever occurring) there shall be substituted the word “society”.

(6) For sub-paragraph (7) there shall be substituted the following paragraphs–

“(7) In sub-paragraph (1) above “the appropriate portion” means–

(a) where the payment in question is either an amount of manufactured gilt interest received or an amount of real gilt interest received and is income arising from–

(i) assets linked to tax exempt basic life assurance and general annuity business or to tax exempt class IV business, or

(ii) assets other than those of the society’s long term business fund,

the whole;

(b) where the payment in question is as mentioned in paragraph (a) above but is income arising from the society’s overseas life assurance fund, the fraction whose numerator is the mean of the opening and closing liabilities to policyholders in respect of the society’s tax exempt overseas life assurance business and whose denominator is the mean of the opening and closing liabilities to policyholders in respect of the whole of the society’s overseas life assurance business;

(c) where the payment in question is as mentioned in paragraph (a) above but is not referable to a category of business by virtue of subsection (3) or (4) of section 432A(2), the provisional fraction;

(d) where the payment in question is an amount of manufactured gilt interest paid in respect of–

(i) assets linked to tax exempt basic life assurance and general annuity business or to tax exempt class IV business, or

(ii) assets other than those of the society’s long term business fund,

the whole;

(e) where the payment in question is as mentioned in paragraph (d) above but is paid in respect of income arising from assets of the society’s overseas life assurance fund, the fraction whose numerator is the mean of the opening and closing liabilities to policyholders in respect of the society’s tax exempt overseas life assurance business and whose denominator is the mean of the opening and closing liabilities to policyholders in respect of the whole of the society’s overseas life assurance business;

(f) where the payment in question is as mentioned in paragraph (d) above but is not referable to a category of business by virtue of subsection (3) or (4) of section 432A, the provisional fraction;

(g) except as provided by paragraphs (a) to (f) above, none.

(7A) In determining the provisional fraction for the purposes of sub-paragraph (7)(c) and (f) above, tax exempt basic life assurance and general annuity business and tax exempt class IV business shall be taken to be a single category for the purposes of section 432A(5).

(7B) In sub-paragraph (7) above references to assets of the society’s long term business fund–

(a) as respects societies referred to in paragraph (1) of regulation 13 of the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997(3), shall be construed in accordance with the definition in subsection (11) of section 432A, read with subsections (12) to (14) of that section, as those subsections are added by paragraph (5) of regulation 13 of those Regulations;

(b) as respects other societies, shall be construed in accordance with the definitions of “long term business” (as substituted by regulation 6(4) of those Regulations) and “long term business fund” in section 431(2)(4).

(7C) In sub-paragraphs (7) and (7A) above–

• “tax exempt basic life assurance and general annuity business” shall be construed in accordance with the definition inserted in section 431(2) by regulation 6(2) of the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997;

• “tax exempt class IV business” shall be construed in accordance with the definition inserted in section 431(2) by regulation 7(2) of those Regulations;

• “tax exempt overseas life assurance business” shall be construed in accordance with section 441(4D)(5).”

(7) In sub-paragraph (8)–

(a) for the words “sub-paragraph (7)(b)(iv)” there shall be substituted the words “sub-paragraph (7)(c) and (f)”;

(b) for the word “company's” there shall be substituted the word “society's”.”

(1)

Inserted in Schedule 19AB by regulation 6 of S.I. 1999/623.

(2)

Section 432A was inserted by paragraph 4 of Schedule 6 to the Finance Act 1990 (c. 29) and amended by section 91(2)(a) of, and Part III(8) of Schedule 23 to, the Finance Act 1993, section 167(2) of the Finance Act 1996, and paragraph 13 of Schedule 8 to the Finance Act 1995. The section was modified in relation to friendly societies by regulations 9 to 13 of S.I. 1997/473.

(3)

S.I. 1997/473, amended by S.I. 1997/2877.

(4)

Section 431 was amended by paragraph 1 of Schedule 6 to the Finance Act 1990, paragraph 1 of Schedule 8 and Part VIII(5) of Schedule 29 to the Finance Act 1995, and Part V(26) of Schedule 41 to the Finance Act 1996.

(5)

Subsection (4D) of section 441D was inserted by regulation 28(3) of S.I. 1997/473.