What does section 211ZA of the Taxation of Chargeable Gains Act 1992 do?

Section 211ZA governs the transfer of unused BLAGAB allowable losses when an insurance business transfer scheme moves basic life assurance and general annuity business from one company to another. The losses become losses of the transferee arising in the accounting period containing the transfer date, but cannot offset gains accruing before that date.

How are unused BLAGAB losses apportioned when only part of the business is transferred?

When only part of a transferor's BLAGAB is transferred, only an appropriate proportion of the unused allowable losses moves to the transferee rather than the full amount. If business is transferred to multiple transferees, losses are divided among them on an appropriate basis. Any disputes about apportionment are resolved through the tribunal appeal process.

What happens to the shareholders' share of transferred losses under section 211ZA?

For ring-fencing purposes under section 210A, the shareholders' share of transferred losses is deemed to be the same proportion as it would have been had the losses remained with the transferor. This preserves the existing split between policyholders' and shareholders' interests through the insurance business transfer.

What qualifies as relevant unused losses under section 211ZA TCGA 1992?

Relevant unused losses are BLAGAB allowable losses that accrued to the transferor in or before the accounting period ending on the transfer date but have not been deducted from chargeable gains. If no accounting period ends on that date, the legislation deems one to exist, and any unrelieved losses from that deemed period qualify.

Taxation of Chargeable Gains Act 1992 section 211ZA

Transfers of business: transfer of unused losses

Section 211ZA deals with how unused allowable losses relating to basic life assurance and general annuity business (BLAGAB) are transferred from one insurance company to another when an insurance business transfer scheme takes place.

When an insurance business transfer scheme moves BLAGAB from a transferor to one or more transferees, any relevant unused BLAGAB allowable losses can transfer to the receiving company or companies.
Transferred losses are treated as BLAGAB allowable losses of the transferee arising in its accounting period containing the transfer date, but cannot be set against chargeable gains accruing before that date.
Where only part of the BLAGAB is transferred, or where there are multiple transferees, the unused losses are apportioned on an appropriate basis, with any disputes resolved through the appeal process.
For ring-fencing purposes, the shareholders' share of the transferred losses is taken to be the same proportion as it would have been had the losses remained with the transferor.

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