LAM17240 - Modifications to the definition of BLAGAB and PHI: SI2012/3008

The definition of BLAGAB in FA12/S57 is modified to include tax exempt business (SI2012/3008/REG5) as business that is exempt by virtue of FA12/S153, S158, S164, S165, S166 or S167.

SI2012/3008/REG7 modifies the definition of PHI business in FA12/S63 for friendly societies so that PHI business does not include tax exempt business. A friendly society writing only PHI (income protection) business is very likely to have some tax exempt business, such that FA12/S72 does not apply.

This creates an apparent circularity - PHI excludes exempt PHI business (FA12/S63 as modified), but for business to be exempt PHI business it must first be PHI business (FA12/S153). This is resolved by SI2012/3008/REG14, which modifies FA12/S172(2) so that it applies the definitions in FA12/PART2 to FA12/PART3 “except where the context otherwise requires”. In FA12/S153, the context requires PHI to take the meaning given in FA12/S63 without modification by SI2012/3008/REG7.