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HMRC internal manual

Lloyd's Manual

HM Revenue & Customs
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Corporate members: transfers of business: 2007 onwards

Adapted rules on successions (meaning transfers of business remaining under common control) apply where one corporate member (the successor) has taken up the syndicate capacity of another corporate member (the predecessor). The usual rules under ICTA88/S343 (CTM06060 - see LLM10000) are applied as if 

  • the reference there to a trade means the predecessor’s underwriting business
  • the predecessor ceases to carry on the trade, and the successor begins to carry it on, at the end of the first declaration year linked with the predecessor’s last active underwriting year.

The focus is on declaration year linked with the last active underwriting year because that is the period for which the results are recognised for tax purposes (LLM4060). The reference to ‘first declaration year’ recognises that the syndicate might go into run-off, when results for the active underwriting year would be declared more than once (LLM2070). Last active underwriting year has the meaning given in FA94/S227A, which fixes the year by reference to the one in which the last significant underwriting activities take place, ignoring any later year in which activities insignificant by comparison may occur.

The legislation looks to whether a succession has constructively taken place with substantially all the activities being transferred from one company to another under common control. It is not necessary to investigate whether every last unit of syndicate capacity of the predecessor features with the successor.

This provision, within FA94/S227B, applies where the predecessor’s last active underwriting year, as defined above, is 2007 or later. Previously, groups could sometimes get the effective benefit of the relief on transferring losses within a group under common control by tactical use of the disclaimer provision in FA00/S107 (4). This ability was withdrawn, subject to a transitional provision, by FA07/S42 and FA07/SCH11/PARA4.