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HMRC internal manual

Lloyd's Manual

HM Revenue & Customs
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Equalisation reserves for corporate and partnership members: election not to take a tax deduction

A corporate or partnership member may decide whether or not to set up and maintain an equivalent Lloyd’s reserve - see LLM3420. But having chosen to maintain a reserve, it must be maintained from year to year according to normal accounting principles, with the closing reserve for one period carried forward to be the opening reserve for the next. If the corporate or partnership member does not wish to claim an available equalisation relief for any period, ICTA88/S444BA (4) to (6) applies as described at GIM7250.

In summary, this provides that the member may elect within a two year period to waive all or part of a tax deduction for a net transfer in, with the unrelieved transfer carried forward to be set at the earliest opportunity against future transfers out.