D7.608 BLAGAB or eligible PHI—taxable societies
Profits of the BLAGAB or eligible PHI business of a friendly society, so far as they are not tax exempt1, are chargeable to corporation tax in accordance with the provisions applying to mutual life assurance business2 (or other long term business3) carried on by insurance companies. The assumption of mutuality applicable to life assurance business was deliberately omitted in respect of other long term business, which follows the facts of the situation. The provisions relating to mutual life assurance business are described in detail in Division D7.4, but the main effect is that, for certain categories of business, profits are not calculated under the general rules applicable trading income but are treated broadly as the excess of investment income and chargeable gains over expenses (which can include capital allowances).
The Treasury may make regulations providing for modifications and exceptions to those corporation tax rules, including the requirement that any part of a business is to be treated as a separate business4. The regulations providing for modifications from 1 January 20135 are much shorter than the modifications applying before that date6, and largely contain modifications to the life office provisions to take account of exempt business written by friendly societies.
The main modifications and exceptions made by the Treasury regulations applying before and after 1 January 2013 are described below.