Summary
1.Section 9 introduces a new anti-avoidance rule, which ensures that section 432CA of the Income and Corporation Taxes Act 1988 (ICTA), introduced by Finance Act (FA) 2010, cannot be circumvented by the transfer of long-term insurance business from one company to another.
2.The section applies when:
	a company which is not a non-profit company transfers business from a non-profit fund to the non-profit fund of another company;
	the fair value of assets transferred exceeds the amount of liabilities transferred; and
	either the transferor or the transferee (or both) has a main purpose of securing a reduction of tax payable, by way of amounts falling to be apportioned under section 432C of ICTA by the transferee rather than by the transferor because of the transfer.
3.Where the section applies, the difference between the fair value of assets transferred and the amount of the liabilities transferred (the “chargeable excess”) is deemed to be a taxable receipt of the transferor in the period of account ending immediately before the transfer, or if there is no such period, the period of account during which the transfer occurs.
4.To prevent double taxation a corresponding relief is given in the transferee company as and when the chargeable excess is demonstrably brought into account and would therefore become taxable income of the transferee. In cases where the chargeable excess is not brought into account straightaway, it is necessary to determine how much, if any, of it has been brought into account in a period of account. To do this, there is a comparison between the line 51 amount (broadly the excess of the value of assets over liabilities of the fund) at the end of the period and the chargeable excess. The corresponding relief for that period is the difference between the line 51 amount and the chargeable excess reduced by any corresponding relief given for earlier periods of account.