Finance Bill 2002
Amendment 205 Page 453 Line 15 & 16
Amendment 206 Page 454 Line 22
Mr Paul Boateng (Labour, Brent South)
Schedule 32, page 453, leave out lines 15 and 16 and insert ?
?(a) for the purposes of subsection (1)(c)(i) and (3A) above, as an amount payable under the contract, and
(b) for the purposes of section 172, as a payment made at the time the contract takes effect.?
Schedule 32, page 454, line 22, leave out from ?treated? to end of line 23 and insert ?, for the purposes of subsections (1)(b)(i) and (3A) above, as an amount payable under the contract at that time?.
EXPLANATORY NOTE
SUMMARY
1. The purpose of these amendments is to correct a drafting omission in the provisions affecting the deductions that may be allowed for Lloyd's members who have paid cash calls that are subsequently deemed to be payments under quota share contracts for the purposes of the new rules in Schedule 32, Finance Bill 2002.
2. The amendments ensure that any deduction for cash calls will be allowable in the year of assessment or accounting period in which the contract takes effect.
DETAILS OF THE AMENDMENT
3. The amendment alters Schedule 32 in a similar way in two parts of the Schedule. In the first of these, the change affects individuals. It amends the new subsection 178 (3B) of the Finance Act 1993, as introduced by Schedule 32, by adding a provision that ensures that, for the purposes of section 172 of that Act, payment is treated as made at the time the contract takes effect. In the second, the change affects the position of corporate bodies. It amends the new section 225(3B) of the Finance Act 1994, as introduced by Schedule 32, to provide that the amount payable under the contract is to be treated as an amount payable under the contract at the time the contract takes effect.
BACKGROUND
4. The aim of clause 85 and Schedule 32 is to ensure that members of Lloyd's who enter into a special type of reinsurance contract known as a quota share contract receive tax relief once only on the losses to which that contract relates. The provisions of the Schedule set out the circumstances in which a deduction may be made and the amount of that deduction.
5. The Opposition put down two amendments (106 and 108) designed to fix the time at which an amount of a cash call that was treated as part of the quota share contract premium for the purposes of the legislation would be allowable as a deduction.
6. The Government accepted that the legislation as drafted failed to make this clear and accepted the need for an amendment to put the position beyond doubt. Legal advice indicated that the wording of the Opposition amendment might give rise to ambiguity. So the Government decided to put down its own amendments to achieve the intention of the Opposition's amendments. These amendments give effect to these changes.