The Taxation of Regulatory Capital Securities (Amendment) Regulations 2015
Detail of outcome
This consultation contributed to The Taxation of Regulatory Capital Securities (Amendment) Regulations 2015.
Original consultation
Consultation description
The technical consultation will be of interest to financial institutions, in particular insurance companies, reinsurers, banks and building societies. In the 2014 Budget the government announced that it would make regulations to ensure that insurers’ Solvency II instruments, which are issued in the form of debt, are taxed as debt instruments. It should be noted that this treatment is subject to the outcome of the Organisation for Economic Co-operation and Developments Base Erosion and Profit Shifting project. In particular, where an instrument between related parties leads to a hybrid outcome, tax deductibility will only be preserved if the conditions for the exclusion are met.
These regulations amend existing Corporation Tax regulations to apply Part 5 Corporation Tax Act (CTA) 2009 to Solvency II complaint instruments issued by insurers. Amendments are also made to update the existing Taxation of Regulatory Capital Securities Regulations 2013 to take into account changes made to Part 5 CTA 2009 by the Finance (No 2) Bill 2015.
HM Revenue and Customs (HMRC) has published draft regulations, together with a draft explanatory memorandum, for a period of technical consultation which will close on 9 September 2015.
We are interested to receive views on the draft regulations’ ability to provide certainty of tax treatment for new types of regulatory capital security issued to meet the requirements of the Commission Directive (EU) No 2009/138/EC (Solvency II Directive) and Commission Delegated Regulation (EU) No 2015/35 (Delegated Acts). We would also be interested to hear views on the commencement and transitional provisions contained with the draft regulations, which have been aligned with the proposed changes to Part 5 of CTA 2009.
Any comments on this draft should be sent by email to email: hayley.moran@hmrc.gsi.gov.uk. HMRC is willing to meet interested parties directly to discuss the draft regulations. Please contact Hayley Moran by Telephone: 03000 514795 or email to make arrangements as soon as possible.
Additionally a meeting has been arranged at 100 Parliament Street, London, SW1A 2BQ, for 10.30am until 12.30pm on 6 August 2015 for those who may wish to discuss the regulations in an open forum. Space will be limited and there is controlled access to the building. Therefore, for reasons of practicality and security, if you wish to attend this meeting, you must notify Hayley Moran by telephone or email by 31 July 2015.
