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HMRC internal manual

Lloyd's Manual

From
HM Revenue & Customs
Updated
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Names: basis of assessment: introduction

Names are taxed on the profits or losses arising in a ‘corresponding year’. Syndicate results and premium trust fund (PTF) income are taxed on the amounts ‘declared’ in the corresponding year. Ancillary trust fund and non-syndicate income and expenses are taxed on the amounts received and paid in the corresponding year (LLM5300).

Corresponding year concept

The corresponding year concept determines the timing of assessments on the Lloyd’s underwriting business. An underwriting year and a tax year correspond to each other if the underwriting year ends in the tax year (FA93/S184 (2)). An underwriting year for the purposes of the Lloyd’s legislation is the same as a calendar year (FA93/S184 (1)(d)). Thus, the underwriting year ending 31 December 2004 corresponds to the tax year 2004-05.

This concept applies to all aspects of the taxation of Lloyd’s trading income, but not for capital gains tax purposes.

Syndicate results and PTF income: the ‘declaration basis’

Syndicate results, and PTF income, are treated as arising in the calendar year in which they are declared and are taxable in the tax year corresponding to that calendar year (FA93/S172 (1)(a)). For instance, a 2004 syndicate closes 31 December 2006 and declares its results in May 2007. The results of that syndicate are included in the trading results for 2007-08, the tax year corresponding with calendar year 2007 when the results were declared.

The declaration year basis also applies to the results of run-off accounts. For instance, if a 2004 syndicate does not close and produces run-off accounts for the year to 31 December 2007. The results of this run-off account are declared in May 2008 and are taxable in the corresponding tax year, 2008-09.