LAM17120 | BLAGAB or eligible PHI business - old friendly societies: FA12/S161

An “old society” means:

(a) a registered friendly society which was registered before 4 February 1966,

(b) a registered friendly society which was registered in the period beginning with that date and ending with 3 May 1966 and which on or before 3 May 1966 carried on any life or endowment business (within the meaning of FA66/S29), or

(c) an incorporated friendly society which, before its incorporation, was a registered friendly society within paragraph (a) or (b) (FA12/S161(2)).

For an old society, for contracts taken out before 1 September 1987, £10 of the premium should be ignored in applying the limits in FA12/S160(3) (FA12/S161(3)).

HMRC Commissioners may give directions to an old society if:

(a) the society begins to carry on exempt BLAGAB or eligible PHI business or, in their opinion, begins to carry on exempt BLAGAB or eligible PHI business on an enlarged scale or of a new character, and

(b) it appears to them, having regard to the restrictions placed on qualifying policies issued by friendly societies other than old societies by paragraphs 3(1)(b) and 4(3)(b) of Schedule 15 to ICTA88, that for the protection of the revenue it is expedient to give the direction (FA12/S163(1) and (2)).

The direction has the effect that the society is to be treated for the purposes of FA12/PART3 and ICTA88/SCH15 as a friendly society other than an old society with respect to business carried on after the date of the direction (FA12/S163(3)).

The society may appeal against the direction on the ground that:

(a) it has not begun to carry on business as mentioned in subsection (2)(a), or

(b)the direction is not necessary for the protection of the revenue (FA12/S163(4)).

The appeal must be made within 30 days of the date on which the direction is given (FA12/S163(5)).

If a registered friendly society in respect of which a direction is in force under this section becomes an incorporated friendly society, the direction continues to have effect, so that for the purposes of FA12/PART3 and ICTA88/SCH15 it is treated as a friendly society other than an old society (FA12/163(6)).

Directions given to old societies

Prior to issuing any direction, agreement must be sought from HMRC’s Business, Assets, and International – Financial Services Team to proceed.