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HMRC internal manual

Lloyd's Manual

Syndicate accounts: taxation: syndicate returns and determinations: (2)

PenaltiesThere are penalties for late or incorrect returns. A late return includes one where part of the information required by the notice is not supplied until after the filing date. The maximum amount of each penalty depends in each case upon the number of members of the syndicate. This includes both bespoke (individual) and MAPA (pooling agreement) members, but a member is not counted two or more times because that member is on one or more MAPAs and/or is a bespoke member. Partnership and corporate members count as one member each, irrespective of whether the partnership member includes individuals who are also bespoke members or members of other partnerships.

As with other penalties, the amount charged can be mitigated under TMA70/S102 at HMRC’s discretion.

The penalty for a late return is £60 per day per 50 members of the syndicate.

If a managing agent fraudulently or negligently delivers an incorrect return there is a maximum penalty of £3,000 multiplied by the number of members of the syndicate.

ApportionmentsOnce the syndicate profit or loss is determined, the result is divided among the members of the syndicate. This is referred to as an apportionment. It is an obligation of the managing agent that is carried out on their behalf by Lloyd’s MSU (

LLM1170). In general the syndicate result is apportioned rateably to the amount of capacity each member has contributed to the syndicate; this is known as apportionment by stamp. However, some parts of the result are taken out of the amount apportioned by stamp and are attributed to members on different bases. These include Central Fund contributions, which may be levied at different rates on different members, FOTRA ‘exempt’ amounts (LLM2150), and any other matters which do not relate equally to all members of the syndicate, such as interest on late paid cash calls.

For each member, Lloyd’s MSU then collates the member’s share of the profit or loss from each syndicate on which the member has participated to produce the aggregate syndicate result for that member. These are referred to as consolidated tax advices and are set out on Lloyd’s forms CTA1.

RITC adjustmentsFA93/S177 used to provide a mechanism for limiting the tax deduction allowed for RITC to an amount which was fair and reasonable. This was because the Lloyd’s rule was only that the RITC had to be above best estimate – there was no other limit. A corresponding adjustment was made in the tax computations of the reinsuring syndicate. This provision was repealed with effect from 1 January 2000, and any necessary adjustments were made at member level under FA00/S107.

FA00/S107 ceased to apply, subject to transitional arrangements, for periods of account ending on or after 19 July 2007. It was replaced by a system which limits deductible amounts by reference to an ‘appropriate amount’. A corresponding adjustment is once again made, under FA07/SCH11/PARA1 (3)(b).