LAM13080 | Transfers of long-term business: the anti-avoidance rule: FA12/S132

The anti-avoidance rule in FA12/S132 applies where a company secures a corporation tax advantage which can include profits charged to tax under either I-E or CTA09/S35 (trade profits). The provisions apply to “insurance business transfer arrangements” which refers to the transfer scheme and any arrangements connected to that scheme entered into on or after 1st January 2013. The concept of arrangements is wide and can be expected to include associated reinsurances and any other transactions undertaken in connection with the business transfer.

The provisions in Section 132 apply where the main purpose, or one of the main purposes, of entering into business transfer arrangements is a purpose which consists of securing a tax advantage to any company. The remedy in Section 132(4) is to make adjustments to income and gains sufficient to negate the tax advantage, apportioned on a just and reasonable basis where necessary.

A company may make an application in writing under FA12/S133 for clearance from HMRC that:

• None of the company’s main purposes in entering into the arrangements is an unallowable purpose, or

• in the case of an intra-group transfer, that the transfer produces no overall tax advantage for the group.

FA12/S134 describes the administrative arrangements for the application. It must be made in writing and contain details of the insurance business transfer arrangements. HMRC may, within 30 days of receipt of the application, request further particulars to allow a decision to be made. Either the decision or the request for further particulars must be made within 30 days of receipt of the application. Where further particulars are provided HMRC has 30 days from receipt to provide a decision. If the applicant fails to provide the further information requested within 30 days, or such longer period that HMRC gives, then the application may not proceed further.

If any particulars provided under this section do not fully and accurately disclose all facts and considerations material for HMRC’s decision, any resulting notice under FA12/S133 is void.