Section 636 — Corporation Tax Act 2009: Modifications of Chapter 5

Modifications of Chapter 5 636 1 Chapter 5 (continuity of treatment on transfers within groups) has effect in relation to insurance companies with the following modifications.

2 Section 625(1)(a) (which sets out one of the conditions for that section to apply) has effect as if for “section 626(2)” there were substituted “section 626(2), (2A) or (2B)”.

3 Section 626 (transactions to which section 625 applies) has effect as if after subsection (2) there were inserted— 2A A transaction is within this subsection if it is a transfer between two companies of business consisting of the effecting or carrying out of contracts of long-term insurance which has effect under an insurance business transfer scheme. 2B A transaction is within this subsection if it is a transfer between two companies which is a qualifying overseas transfer. 2C In subsection (2B) “ qualifying overseas transfer ” means so much of a transfer of the whole or any part of the business of an overseas life insurance company carried on through a permanent establishment in the United Kingdom as takes place in accordance with an authorisation granted outside the United Kingdom for the purposes of Article 39 of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) .

4 Section 625 (group member replacing another as party to derivative contract) does not apply as a result of a transaction or series of transactions within section 626(2) or (3) in relation to a transfer of an asset, or of rights or duties under or an interest in an asset, if , immediately before or after the transfer, the asset was held for the purposes of a company's long-term business (but, in the case of an overseas life insurance company, ignoring assets which are not UK assets (within the meaning of section 117 of FA 2012)).

5 Section 625 does not apply as a result of a transaction within section 626(2A) or (2B) in relation to a transfer of an asset, or of rights or duties under or an interest in an asset, if the asset—

a was within one of the applicable categories immediately before the transfer, and b is not within that category immediately after it. 5A For the purposes of subsection (5)(a) “ the applicable categories ” means—

a in the case of a UK life insurance company, the long-term business categories or a category of assets which are not held for the purposes of its long-term business, and b in the case of an overseas life insurance company, the UK long-term business categories, a category of UK assets which are not held for the purposes of its long-term business or a category of assets which are held by it but which are not UK assets.

6 Subsection (7) applies for the purposes of subsection (5) if one of the companies is an overseas life insurance company.

7 An asset is taken to be within the same category both immediately before the transfer and immediately after it if the asset—

a was within one category immediately before the transfer, and b is within the corresponding category immediately after it.

8 For the purposes of this section—

a “ the long-term business categories ” has the same meaning as in section 116 of FA 2012, and “ the UK long-term business categories ” and “ UK assets ” have the same meanings as in section 117 of FA 2012, and b section 122 of FA 2012 applies as it applies for the purposes of Chapter 8 of Part 2 of that Act.