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HMRC internal manual

Lloyd's Manual

Reinsurance to close (RITC) and technical provisions: taxation following repeal of section 107 FA 2000: the appropriate amount: adaptations of FA07/SCH11

The following adaptations and special provisions are made to the primary legislation within FA07/SCH11 to cater for members of Lloyd’s syndicates.

  • For the purposes of the possible restriction to the ‘appropriate amount’, the term ‘general insurer’ is extended to include members of a Lloyd’s syndicate (FA07/SCH11/PARA3 (1)(c)).
  • The accounts by reference to which the rules are to apply are taken to be the syndicate accounts (FA07/SCH11/PARA3 (4)).
  • The reference to ‘period of account’ is to be taken to mean an underwriting year for which profits or losses are declared (FA07/SCH11/PARA3 (5)(b)).
  • The reference to ‘technical provisions’ is to be taken to mean, in the case of a closed syndicate the reinsurance to close (or deemed reinsurance to close), and in the case of an open syndicate, the provisions for claims outstanding, unearned premiums and unexpired risks (FA07/SCH11/PARA3 (7)).
  • Regulations may be made by HMRC to reduce the adjustments in relation to particular syndicate members. This is a reserve power, designed to deal with the possibility that members of syndicates may pay reinsurance premiums on their own behalf, the effect of which will be to require the unpaid claims liabilities (net of reinsurance) to be recalculated in these particular cases (FA07/SCH11/PARA3 (11)).
  • Regulations under existing administrative powers in FA93 (for income tax) and FA94 (for corporation tax) may adapt assessment and collection rules to cater for the enforcement provisions in FA07/SCH11/PARA 2 (FA07/SCH11/PARA3 (14)). See LLM3330.

In addition, FA07/SCH11/PARA3 (8) provides definitions for reinsurance to close and ‘open Lloyd’s syndicate’, and FA07/SCH11/PARA3 (9) explains that a syndicate is formed for an ‘underwriting year’ which is a calendar year.