The Insurance Companies (Taxation of Reinsurance Business) (Amendment) Regulations 2008

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Insurance Companies (Taxation of Reinsurance Business) Regulations 1995 (S.I. 1995/1730) (“the principal Regulations”).

Regulation 1 provides for citation, commencement and effect of these Regulations. The power to make Regulations with retrospective effect is contained in paragraph 58 of Schedule 8 to the Finance Act 1995.

Regulation 2 introduces the amendments to the principal Regulations.

Regulation 3 amends the definition of “deposit-back arrangement” in regulation 2 of the principal Regulations to refer to the definition of “deposit back arrangements” in section 431(2) of Income and Corporation Taxes Act 1988 (“ICTA”) which is inserted by paragraph 9 of Schedule 17 to the Finance Act 2008. Regulation 3 also updates the principal Regulations following the transfer of functions to Her Majesty’s Revenue and Customs by the Commissioners for Revenue and Customs Act 2005.

Regulation 4 amends the definition of “C” in regulation 3(1) of the principal Regulations and regulation 5 amends regulation 6(3)(e) of the principal Regulations by omitting the references to section 85 of the Finance Act 1989.

Regulation 6 amends regulation 7(11) of the principal Regulations. The amendments update the regulation, in particular by replacing references to “branch and agency” with references to “permanent establishment” in accordance with sections 149 and 153 of the Finance Act 2003.

Regulation 7 amends regulation 9(2)(c) of the principal Regulations. The amendment replaces the reference to the charge under Case I of Schedule D with a reference to the charge on an insurance company which is a reinsurer to which section 431G of ICTA applies. As a result of Schedule 7 to the Finance Act 2007 this charge is the only one that can apply a Case I basis of charge to an insurance company.

Regulation 8 amends regulation 13 of the principal Regulations by substituting paragraph (3). The amendment ensures that, where necessary, an accounting period of the transferor of reinsurance arrangements shall be treated as ending on the day of the transfer and an accounting period of the transferee shall be treated as beginning immediately after that day. The amendment also ensures that accounting periods ending (or treated as ending) on that date or beginning (or treated as beginning) on or immediately after that day are not to be treated as final or first periods respectively for the purposes or regulations 4 to 7 of the principal Regulations.

A full and final Impact Assessment has not been produced for this instrument as a negligible impact on the private or voluntary sectors is foreseen.