LAM17150 | Relevant other business - exemption for incorporated friendly societies: FA12/S164, S165 and S167

An incorporated friendly society which is a “qualifying society” is not liable to pay corporation tax (whether on income or chargeable gains) on its profits other than those arising from:

(a) life assurance business (FA12/S165(1)(a)), or

(b) PHI business comprised in BLAGAB or eligible PHI business (FA12/S165(1)(b)).

The exemption only applies if the society makes a claim by submitting a tax return (FA12/S165(6)).

For incorporated societies there are three cases which make a “qualifying society”:

• Case A – Immediately before its incorporation, the incorporated society was a registered friendly society which was a qualifying society within the meaning of FA12/S164 (LAM17140) (FA12/S165(3)).

• Case B – It was not formed by incorporation or amalgamation of one or more friendly societies and its business is limited to the provision, in accordance with its rules, of benefits for or in respect of employees of a particular employer or such other group of persons as is for the time being approved for the purposes of this section by HMRC Commissioners (FA12/S165(4)).

• Case C – It was formed by the amalgamation of two or more friendly societies, and at the time of the amalgamation each of the societies being amalgamated was a qualifying society within the meaning of FA12/S164 (LAM17140) or other provisions of FA12/S165 (FA12/S165(5)).

This exemption does not apply to any profits arising or accruing to the society from a subsidiary within the meaning of FSA92 (FA12/S165(7)(a)) or over which the society has joint control within the meaning of FSA92 (FA12/S167(7)(b)).