Schedule 7 - Insurance companies etc
Finance Bill
9:30 am
Ms Ruth Kelly (Financial Secretary, HM Treasury; Bolton West, Labour)
First, let me say what a pleasure it is to serve under your chairmanship, Sir John. I look forward to your guidance.
Amendments Nos. 86 and 87 extend the scope of a relieving provision that we have included in the Bill. Last year, we introduced a package of anti-avoidance rules to prevent life insurance companies from exploiting the system when transferring their business to another company, usually in the same group. One of those rules was designed to prevent companies from leaving assets representing untaxed profits behind and then extracting them in a tax-free way when they ceased to be an insurance company. However, the provision went too far, and it has been pointed out that it could inhibit the restructuring of life companies for good commercial reasons if companies leave behind assets to meet liabilities to policyholders whom they are also leaving behind.
The Bill therefore allows liabilities to be set off against assets, and it describes the type of liabilities that count for that purpose. However, it now turns out that other liabilities may also be left behind.