The Taxation of Insurance Securitisation Companies Regulations 2007

Insurance securitisation companies

Meaning of insurance securitisation company

4.—(1) For the purposes of these Regulations an “insurance securitisation company” means a company that is an insurance special purpose vehicle and—

(a) meets conditions A to C, or

(b) whose liabilities representing debtor relationships are owed wholly or mainly to a note-issuing company or intermediate borrowing company within the Taxation of Securitisation Companies Regulations 2006(1).

(2) Condition A is that the company is within section 84(2)(a) of the Finance Act 2005.

(3) Condition B is that the securities that represent the capital market investment referred to in section 84(2)(a)(ii) of that Act are issued wholly or mainly to independent persons.

(4) Condition C is that the total value of the capital market investments made under the capital market arrangement referred to in section 84(2)(a)(iii) of that Act is at least £10 million.

Insurance securitisation companies that have an unallowable purpose

5.—(1) These Regulations do not apply or will cease to apply to an insurance securitisation company that—

(a) has an unallowable purpose, or

(b) at any time has had an unallowable purpose.

(2) Where these Regulations cease to apply by virtue of this regulation the accounting period of the company shall end.

(3) For the purpose of these Regulations an insurance securitisation company has an unallowable purpose if the purpose for which the company is a party to—

(a) the capital market arrangement,

(b) any related transaction, or

(c) any transaction in pursuance of the capital market arrangement,

includes a purpose which is not amongst the business or other commercial purposes of the company.

(4) If one of the purposes for which an insurance securitisation company is at any time a party to—

(a) any capital market arrangement,

(b) any related transaction in the case of any capital market arrangement, or

(c) any transaction in pursuance of any capital market arrangement,

is a tax avoidance purpose, that purpose shall be taken to be a business or other commercial purpose of the company only where it is not the main purpose, or one of the main purposes, for which the company is party to the arrangements or transaction at that time.

(5) For the purpose of this regulation—

(a) one or more transactions are to be regarded as related transactions, in the case of any arrangements, if it would be reasonable to assume, from either or both of—

(i) the likely effect of the transactions, and

(ii) the circumstances in which the transactions are entered into or effected,

that none of the transactions would have been entered into or effected independently of the arrangements; and

(b) transactions are not prevented from being related transactions, in the case of any arrangements, just because the transactions—

(i) are not between the same parties, or

(ii) are not between the parties to the capital market arrangements.

(6) In this regulation—

“tax avoidance purpose” means any purpose that consists in securing a tax advantage for any other person;

“tax advantage” has the same meaning as in section 840ZA of ICTA (tax avoidance) (2).

Application of accounting standards to insurance securitisation companies

6.  For the purposes of the Corporation Tax Acts as they apply to an insurance securitisation company, generally accepted accounting practice shall be taken to be UK generally accepted accounting practice as it applied for a period of account ending on 31 December 2006 but excluding the application of Financial Reporting Standard 26 issued in December 2004 by the Accounting Standards Board.

(1)

S.I. 2006/3296, amended by S.I. 2007/3339 and S.I. 2007/3401.

(2)

Section 840ZA of the Income and Corporation Taxes Act 1988 (c. 1) was inserted paragraph 225 of Schedule 1 to the Income Tax Act 2007 (c. 3).