Preliminary

Citation, commencement and effect

1. —(1) These Regulations may be cited as the Financing-Arrangement-Funded Transfers to Shareholders Regulations 2008 and shall come into force on 12th August 2008.

(2) These Regulations have effect in relation to periods of account beginning on or after 1st January 2008.

Interpretation

2. In these Regulations—

a “relevant financing arrangement” means a relevant financing arrangement in relation to a non-profit fund within section 83YC(4) of the Finance Act 1989( 2 );

a “section 83YC(3) amount” means an amount within section 83YC(3) of the Finance Act 1989;

a “section 83YC(3) period of account” means a period of account for which there is a section 83YC(3) amount;

a “section 83YD arrangement” means a relevant financing arrangement in respect of which there is a section 83YD(2) amount;

a “section 83YD(2) amount” means an amount within section 83YD(2) of the Finance Act 1989( 3 );

a “section 83YD(2) period of account” means a period of account for which there is a section 83YD(2) amount.

The treatment of section 83YC(3) amounts

Amounts wholly attributable to life assurance business or to gross roll-up business

3. —(1) This regulation applies if, at the end of a section 83YC(3) period of account, each relevant financing arrangement of an insurance company has as a condition of the arrangement that—

(a) in the case of a loan, any repayment may only be made if the company has an amount of surplus from carrying on life assurance business or gross roll-up business and the repayment is made from that surplus, or

(b) in the case of a financial reinsurance arrangement, any recapture of liabilities may only be made if the company has an amount of surplus from carrying on life assurance business or gross roll-up business.

(2) The section 83YC(3) amount is wholly referable to life assurance business or to gross roll-up business (as the case may be).

Other cases where relevant financing arrangements meet the loan condition only: life assurance business and PHI business

4. —(1) This regulation applies if, in a section 83YC(3) period of account—

(a) an insurance company carries on both life assurance business and PHI business, and

(b) each relevant financing arrangement of the company in force in that period of account meets the loan condition (and not the reinsurance condition).

(2) The part of the section 83YC(3) amount referable to life assurance business is—

Other cases where relevant financing arrangements meet the loan condition only: gross roll-up business and basic life assurance and general annuity business

5. —(1) This regulation applies if, in a section 83YC(3) period of account—

(a) an insurance company carries on both gross roll-up business and basic life assurance and general annuity business, and

(b) each relevant financing arrangement of the company in force in that period of account meets the loan condition (and not the reinsurance condition).

(2) The part of the section 83YC(3) amount referable to gross roll-up business is—

Other cases where relevant financing arrangements meet the reinsurance condition only: life assurance business and PHI business

6. —(1) This regulation applies if, in a section 83YC(3) period of account—

(a) an insurance company carries on both life assurance business and PHI business, and

(b) each relevant financing arrangement of the company in force in that period of account meets the reinsurance condition (and not the loan condition).

(2) The part of the section 83YC(3) amount referable to life assurance business is—

Other cases where relevant financing arrangements meet the reinsurance condition only: gross roll-up business and basic life assurance and general annuity business

7. —(1) This regulation applies if, in a section 83YC(3) period of account—

(a) an insurance company carries on both gross roll-up business and basic life assurance and general annuity business, and

(b) each relevant financing arrangement of the company in force in that period of account meets the reinsurance condition (and not the loan condition).

(2) The part of the section 83YC(3) amount referable to gross roll-up business is—

Relevant financing arrangements of more than one type

8. —(1) This regulation applies if, in a section 83YC(3) period of account—

(a) an insurance company carries on—

(i) both life assurance business and PHI business, or

(ii) both gross roll-up business and basic life assurance and general annuity business; and

(b) the relevant financing arrangements of the company in force in that period of account include—

(i) at least one arrangement that meets the loan condition (and not the reinsurance condition), and

(ii) at least one arrangement that meets the reinsurance condition (and not the loan condition).

(2) The part of the section 83YC(3) amount referable to life assurance business is determined in accordance with regulation 6(2).

(3) The part of the section 83YC(3) amount referable to gross roll-up business is determined in accordance with regulation 7(2).

The treatment of section 83YD(2) amounts

Amounts wholly attributable to life assurance business or to gross roll-up business

9. —(1) This regulation applies if, at the beginning of a section 83YD(2) period of account, each relevant financing arrangement of an insurance company has as a condition of the arrangement that—

(a) in the case of a loan, any repayment may only be made if the company has an amount of surplus from carrying on life assurance business or gross roll-up business and the repayment is made from that surplus, or

(b) in the case of a financial reinsurance arrangement, any recapture of liabilities may only be made if the company has an amount of surplus from carrying on life assurance business or gross roll-up business.

(2) The section 83YD(2) amount is wholly referable to life assurance business or to gross roll-up business (as the case may be).

Other cases where relevant financing arrangements meet the loan condition only: life assurance business and PHI business

10. —(1) This regulation applies if, in a section 83YD(2) period of account—

(a) an insurance company carries on both life assurance business and PHI business,

(b) each relevant financing arrangement of the company in force in that period of account meets the loan condition (and not the reinsurance condition), and

(c) there has been only one section 83YC(3) amount in that period of account and all preceding periods of account.

(2) The part of the section 83YD(2) amount referable to life assurance business is a fraction of that amount, determined in accordance with regulation 4(2), for the period of account in which the section 83YC(3) amount arose in respect of the section 83YD arrangement.

Other cases where relevant financing arrangements meet the loan condition only: gross roll-up business and basic life assurance and general annuity business

11. —(1) This regulation applies if, in a section 83YD(2) period of account—

(a) an insurance company carries on both gross roll-up business and basic life assurance and general annuity business,

(b) each relevant financing arrangement of the company in force in that period of account meets the loan condition (and not the reinsurance condition), and

(c) there has been only one section 83YC(3) amount in that period of account and all preceding periods of account.

(2) The part of the section 83YD(2) amount referable to gross roll-up business is a fraction of that amount, determined in accordance with regulation 5(2), for the period of account in which the section 83YC(3) amount arose in respect of the section 83YD arrangement.

Other cases where relevant financing arrangements meet the reinsurance condition: life assurance business and PHI business

12. —(1) This regulation applies if, in a section 83YD(2) period of account—

(a) an insurance company carries on both life assurance business and PHI business,

(b) each relevant financing arrangement of the company in force in that period of account—

(i) meets the reinsurance condition (and not the loan condition), or

(ii) meets both the reinsurance condition and the loan condition, and

(c) there has been only one section 83YC(3) amount in that period of account and all preceding periods of account.

(2) The part of the section 83YD(2) amount referable to life assurance business is a fraction of that amount, determined in accordance with regulation 6(2), for the period of account in which the section 83YC(3) amount arose in respect of the section 83YD arrangement.

Other cases where relevant financing arrangements meet the reinsurance condition: gross roll-up business and basic life assurance and general annuity business

13. —(1) This regulation applies if, in a section 83YD(2) period of account—

(a) an insurance company carries on both gross roll-up business and basic life assurance and general annuity business,

(b) each relevant financing arrangement of the company in force in that period of account—

(i) meets the reinsurance condition (and not the loan condition), or

(ii) meets both the reinsurance condition and the loan condition, and

(c) there has been only one section 83YC(3) amount in that period of account and all preceding periods of account.

(2) The part of the section 83YD(2) amount referable to gross roll-up business is a fraction of that amount, determined in accordance with regulation 7(2), for the period of account in which the section 83YC(3) amount arose in respect of the section 83YD arrangement.

Cases involving more than one section 83YC(3) amount

14. —(1) This regulation applies if—

(a) there has been more than one section 83YC(3) amount for a period of account (or for more than one period of account),

(b) that period of account is (or those periods of account are) earlier than the section 83YD(2) period of account, and

(c) regulation 9 does not apply.

(2) The insurance company may claim that the section 83YD(2) amount is such a fraction of the amount determined under section 83YD(4) of the Finance Act 1989 as is just and reasonable in the circumstances.