Section 213: Spreading of gains and losses under section 212., Taxation of Chargeable Gains Act 1992

Any chargeable gains or allowable losses which would otherwise accrue on disposals deemed by virtue of section 212 to have been made at the end of a company's accounting period shall be treated as not accruing to it, but instead—

there shall be ascertained the difference ("the net amount") between the aggregate of those gains and the aggregate of those losses, and

one-seventh of the net amount shall be treated as a chargeable gain or, where it represents an excess of losses over gains, as an allowable loss accruing to the company at the end of the accounting period, and

a further one-seventh shall be treated as a chargeable gain or, as the case may be, as an allowable loss accruing at the end of each succeeding accounting period until the whole amount has been accounted for.

Subsection (1) above shall not apply to chargeable gains or allowable losses except so far as they are gains or losses which—

are referable, in accordance with Chapter 4 of Part 2 of the Finance Act 2012, to basic life assurance and general annuity business ...

For any accounting period of less than one year, the fraction of one-seventh referred to in subsection (1)(c) above shall be proportionately reduced; and where this subsection has had effect in relation to any accounting period before the last for which subsection (1)(c) above applies, the fraction treated as accruing at the end of that last accounting period shall also be adjusted appropriately.

Subject to subsection (8H) below, Where—

the net amount for an accounting period of an insurance company represents an excess of gains over losses,

the net amount for either of the next 2 accounting periods (after taking account of any reductions made by virtue of this section) represents an excess of losses over gains,

there is (after taking account of any such reductions) no net amount for the intervening accounting period (if there is one),

the intervening accounting period (if there is one) is not an accounting period in which the company joined a group of companies, and

within 2 years after the end of the later accounting period the company makes a claim for the purpose in respect of the whole or part of the net amount for that period,

the net amounts for both the earlier and the later period shall be reduced by the amount in respect of which the claim is made.

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Subject to subsection (5) below, where a company ceases to carry on long-term business before the end of the last of the accounting periods for which subsection (1)(c) above would apply in relation to a net amount, the fraction of that amount that is treated as accruing at the end of the accounting period ending with the cessation shall be such as to secure that the whole of the net amount has been accounted for.

Subsection (4) applies in relation to an overseas life insurance company with the insertion after "long-term business" of the words "in the United Kingdom through a permanent establishment".

Subject to subsection (5) below, where a company—

acquired units in a collective investment scheme where section 211B(2) applied in relation to that acquisition, and

other than by virtue of section 212, disposes of some or all of those units during the period of three years after the end of the accounting period of the company in which the acquisition took place,

the fraction of any net amount that is treated as accruing at the end of the accounting period of the company in which the disposal occurs is to be adjusted so as to secure that the whole of the chargeable gain or allowable loss attributable to the units disposed of which has been taken into account in determining the net amount has been accounted for; and fractions of the net amount treated as accruing at the end of subsequent accounting periods are to be adjusted accordingly.

For the purposes of subsection (4ZB) (notwithstanding the provisions of Chapter 1 of Part 4 (shares, securities, options etc))—

units in a collective investment scheme acquired as mentioned in subsection (4ZB)(a) at any time are treated as constituting a class of securities different from all other units in the scheme and from all other classes of securities arising as a result of this paragraph in respect of units acquired at different times,

units in a collective investment scheme acquired as mentioned in subsection (4ZB)(a) are treated as being disposed of before other units in the scheme or, where there are different classes of unit in the scheme, units of the same class held by the company, and

where units are acquired as mentioned in subsection (4ZB)(a) at different times, units acquired at a later time are treated as disposed of before units acquired at an earlier time or, where there are different classes of unit in the scheme, units of the same class acquired at an earlier time.

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The following provisions apply where an insurance business transfer scheme has effect to transfer business which consists of the effecting or carrying out of contracts of long-term insurance from one person ("the transferor") to another ("the transferee").

Subject to subsections (5A) to (7) below, any chargeable gain or allowable loss which (making the assumptions in subsection (5ZA) below) would have accrued to the transferor by virtue of subsection (1) above after the transfer shall instead be deemed to accrue to the transferee.

The assumptions referred to in subsection (5) above are—

that the transferor had continued to carry on the business transferred after the transfer, and

where there is no accounting period of the transferor ending with the day of the transfer, that for the purposes of section 212 and this section, there was such an accounting period.

Subsection (5) above shall not apply where the transferee is resident outside the United Kingdom unless the business to which the transfer relates is carried on by the transferee, for a period beginning with the time when the transfer takes effect, through a permanent establishment in the United Kingdom.

Where subsection (5) above has effect, the amount of the gain or loss accruing at the end of the first accounting period of the transferee ending after the day when the transfer takes place shall be calculated as if that accounting period began with the day after the transfer.

Where the transfer is of part only of the transferor's long-term business, subsection (5) above shall apply only to such part of any amount to which it would otherwise apply as is appropriate.

Any question arising as to the operation of subsection (7) above shall be determined in the same manner as an appeal, and both the transferor and the transferee shall be entitled to be a party to any proceedings.

Subsection (8B) below applies where—

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the transferor and the transferee are, at the time of the transfer, members of the same group,

the transferred assets net amount for the accounting period of the transferor ending with the day of the transfer, or for the immediately preceding accounting period of the transferor, ("the relevant pre-transfer period of the transferor") represents an excess of gains over losses,

the transferred assets net amount for the accounting period of the transferee in which the transfer takes place, or for the immediately following accounting period of the transferee, ("the relevant post-transfer period of the transferee") represents an excess of losses over gains (after taking account of any reductions made by virtue of this section), and

within 2 years after the end of the relevant post-transfer period of the transferee, the transferor and the transferee make a joint election in respect of the whole or part of the net amount for that period by notice to an officer of the Board.

Subject to subsections (8C) to (8E) and (8H) below, the transferred assets net amounts for both the relevant pre-transfer period of the transferor and the relevant post-transfer period of the transferee shall be reduced by the amount in respect of which the election is made.

Subsection (8B) above does not apply if—

the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and

the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer.

If—

the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and

the relevant pre-transfer period of the transferor is the accounting period ending with the day of the transfer,

subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferee in which the transfer takes place.

If—

the relevant post-transfer period of the transferee is the accounting period in which the transfer takes place, and

the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer,

subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferor ending with the day of the transfer.

The conditions referred to in subsections (8D) and (8E) above are that—

there is (after taking account of any reductions made by virtue of this section) no transferred assets net amount for the accounting period, and

the company whose accounting period it is did not join a group of companies in the accounting period.

A copy of the notice containing an election under subsection (8A)(e) above must accompany the tax return for the relevant post-transfer period of the transferee; and paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election.

Subsection (3) above has effect where the company, or the transferee, in question joins a group of companies in the accounting period for which the net amount represents an excess of losses over gains as if a claim or election could not be made in respect of that net amount except to the extent (if any) that the net amount would still arise even if losses accruing after the date on which the company or transferee joined the group of companies were disregarded.

Subsections (8A) and (8B) above have effect where the company, or the transferee, in question joins a group of companies in the accounting period for which the transferred assets net amount represents an excess of losses over gains as if a claim or election could not be made in respect of that net amount except to the extent (if any) that the transferred assets net amount would still arise even if losses accruing after the date on which the company or transferee joined the group of companies were disregarded.

References in this section to a company joining a group of companies are to be construed in accordance with section 184C as if those references were contained in that section; and in subsection (8A)(b) above "group" has the same meaning as in that section.

"Transferred assets net amount" means a net amount ascertained in accordance with section 213(1)(a) but only in relation to those assets referred to in section 212(1) which are transferred by the insurance business transfer scheme from the transferor to the transferee.

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Section 213: Spreading of gains and losses under section 212.

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