The Friendly Societies (Modification of the Corporation Tax Acts) (Amendment) Regulations 2007

EXPLANATORY NOTE

(This note is not part of the Regulations)

Section 463 of the Income and Corporation Taxes Act 1988 (c. 1: “ICTA 1988”) provides that the enactments relating to corporation tax apply to the life or endowment business carried on by friendly societies in the same way as they apply to long-term business of insurance companies, subject to such modifications and exceptions as may be prescribed by the Treasury.

These Regulations amend the regulations making such modifications, the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014: “the principal Regulations”). The Regulations take into account a number of changes made to the life assurance tax provisions, in particular by the Finance Act 2007 (c. 11: “FA 2007”). One major change is the amalgamation of five categories of business into one category.

Regulation 1 provides for citation, commencement and effect. The power to make retrospective provision is conferred by section 463(4) of ICTA 1988.

Regulation 2 introduces the amendments. The remaining regulations amend the principal Regulations so as to make technical modifications to the enactments relating to corporation tax in consequence of FA 2007, with the exception of regulations 4 and 19 which make amendments in consequence of the Finance Act 2006 (c. 25) and regulation 24 which makes an amendment in consequence of the Finance (No. 2) Act 2005 (c. 22).

Regulation 3 amends regulation 2 of the principal Regulations (interpretation).

Regulations 4 to 23 amend regulations of the principal Regulations which modify provisions of ICTA 1988.

Regulations 24 and 25 amend regulations of the principal Regulations which modify provisions of the Finance Act 1989 (c. 26).

Regulation 26 omits regulation 34 of the principal Regulations (modification of paragraph 17 of Schedule 7 to the Finance Act 1991 (c. 31)).

Regulations 27 to 29 amend regulations of the principal Regulations which modify provisions of the Taxation of Chargeable Gains Act 1992 (c. 12).

Regulations 30, 31 and 32(a) amend regulations of the principal Regulations which modify provisions of the Finance Act 1996 (c. 8).

Regulation 32(b) omits regulation 42 of the principal Regulations (modifications of paragraph 18 of Schedule 12 to the Finance Act 1997 (c. 16)) and regulation 32(c) omits regulation 43 of those Regulations (modifications of paragraph 4 of Schedule 6 to the Finance Act 1999 (c. 16)).

Regulations 33 and 34 insert respectively new regulations 43A and 44A in the principal Regulations (modifications of sections 255 and 256 of the Capital Allowances Act 2001 (c. 23)).

These Regulations, together with the relevant legislation in FA 2007, are part of the outcome of a continuing consultation process. A draft regulatory impact assessment was included as part of a consultation document, “Life Assurance Company Taxation – A Technical Consultative Document”, which was published by Her Majesty’s Revenue and Customs in May 2006. This is available at www.hmrc.gov.uk/consultations.