LAM17160 | Transfers from friendly societies to insurance companies etc. - "relevant other business": FA12/S166

In addition, if an insurance company acquires by way of transfer of engagements from a friendly society any “relevant other business”, when the society was exempt from corporation tax on profits arising from that business as a result of FA12/S164 (societies registered before 1 June 1973) or FA12/S165 (incorporated friendly societies) prior to the transfer, the insurance company is exempt from corporation tax on its profits arising from the “relevant other business” so far as relating to contracts made before that time (FA12/S166(2)).

“Relevant other business” means any business other than life assurance business or PHI business comprised in BLAGAB or eligible PHI business (FA12/S166(1)).

If a friendly society converts to a company under FSA92/S91 and so ceases to be a registered friendly society and immediately before that time the society was exempt from corporation tax on profits arising from any “relevant other business” carried on by it under section FA12/S164 or FA12/S165, the company into which the society is converted is exempt from corporation tax on its profits arising from the “relevant other business” so far as relating to contracts made before that time (FA12/S166(3)).

In its computations, any part of a company’s business which is exempt from corporation tax as a result of FA12/S166 is to be treated as a separate business from any other business carried on by the company (FA12/S166(5)).

If the level of benefits on exempt relevant other business policies increases once in the company, the profits on these policies will cease to be exempt (FA12/S166(4)). However, this may not apply where those increases are built into these policies as part of pre-existing policy terms.

The Treasury may make regulations to provide that, where any part of the business of a company is exempt from corporation tax as a result of FA12/S166, the Corporation Tax Acts have effect subject to such exceptions or other modifications as they consider appropriate (FA12/S166(6)).

The regulations may have retrospective effect (FA12/S166(7)).

The regulations may make different provision for different cases or circumstances, and contain incidental, supplementary, consequential, transitional, transitory or saving provision. The regulations are included in Friendly Societies (Modifications of the Tax Acts) Regulations, SI2012/3008. These cover transitional provisions from the pre-FA12 regime.