Schedule 33 - Insurance companies
Finance Bill
10:30 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
I thank the Economic Secretary for his comprehensive review of the highly complex measures at such a late time in the evening. In the main, he has satisfied the concerns raised by our amendments.
There is one matter on which I am certainly not satisfied. When he discussed amendments Nos. 133 and 134, which address whether past surpluses achieved by insurance companies are taxable, he suggested that profits are currently escaping tax. He
would agree that those surpluses arose during the non-taxable mutual environment and did not arise after those businesses became commercial businesses. Economically, those surpluses must surely belong to the policyholders who paid tax on the value of the surplus assets when Lloyds acquired Scottish Widows and when Friends Provident was listed.
The Economic Secretary will know that there is disagreement between leading tax counsels. It is clearly a material point, given the problems that such businesses face in the present environment, which have done so much damage to Equitable Life. As well as the straight legal argument, there is a practical argument in relation to underlying businesses. I therefore do not want to press our amendments, with certain exceptions—we still feel that the Government's stance is not entirely correct and we want to flag that up. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 159, in
schedule 33, page 376, line 30, leave out
'in a period of account'.
No. 160, in
schedule 33, page 376, line 32, after 'account' insert
'in which the transfer takes place or any earlier period of account'.
No. 161, in
schedule 33, page 376, line 34, after second 'account' insert
'in which the transfer takes place'.
No. 162, in
schedule 33, page 376, line 44, leave out 'the' and insert 'any'.
No. 163, in
schedule 33, page 377, line 2, at end insert—
'(2E) If subsection (2B) above applies in relation to the transfer of all the assets of the company's long term insurance fund in accordance with—
(a) an insurance business transfer scheme, or
(b) a scheme which would be such a scheme but for section 105(1)(b) of the Financial Services and Markets Act 2000 (which requires the business transferred to be carried on in an EEA State),
the reference in that subsection to an amount being deemed to be brought into account for the period of account in which the transfer takes place is to its being so deemed for the period of account ending immediately before the transfer takes place.'.
No. 164, in
schedule 33, page 386, leave out lines 41 to 43 and insert
'In arriving at the policy holders' share of chargeable gains accruing to an insurance company under subsection (10) above there is to be ignored—'.—[John Healey.]