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HMRC internal manual

Lloyd's Manual

HM Revenue & Customs
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Names: basis of assessment: cessation: introduction


To stop underwriting as a member of Lloyd’s, an individual Name resigns with effect from the following 31 December. This means that the Name continues to participate in syndicates up until the end of the account in which resignation was tendered, and the Name does not take any new business for subsequent accounts. Before severing connections with Lloyd’s, the Name must wait until all the syndicates for all the accounts in which that individual participated have closed, outstanding liabilities to Lloyd’s have been met and the deposit has been released. This is usually a minimum of three years after resignation.

Cessation is therefore linked with the year in which the Name’s commercial involvement with the Lloyd’s market ends, and not with the date of resignation from Lloyd’s.

Break in trade

Once an individual has become an underwriting member of Lloyd’s, it is usual to participate in syndicates for every year continuously until resignation. But in some circumstances, there may be a break of one or more years when a Name does not underwrite new business. For example, a Name may for personal reasons choose not to underwrite for one or more years, but wish to resume underwriting at some time in the future, or Lloyd’s may suspend a Name if Lloyd’s rules or practices have been disregarded.

Where the name has not resigned membership of Lloyd’s, these gaps are treated as no more than temporary breaks in the trade, even though the Name may be participating in a different range of syndicates after the break compared with those before the break.

Terminal loss relief (LLM5390) is not available for losses in the last year before the gap as the condition in ICTA88/S388 (1), that trade is permanently discontinued, is not met. There has been no commencement of new individual Names from 2003 onwards, and neither would relief be available under ICTA88/S381 for losses sustained in the first four years following resumption of active underwriting, as relief is only available for the tax year in which an individual first carries on the trade (ICTA88/S381 (1)(a)).

A Name who permanently resigns from 2003 cannot reapply for membership as an individual Name.

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Section 179 FA 1993 and SI 1995/351

The basic rule on cessation is given by section FA93/S179 (2). The final tax year is the one that corresponds to the underwriting year in which the Lloyd’s Deposit is repaid. Regulations in SI1995/351 give more detailed rules.

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See LLM5340 for cessation on death.

Cessation for investors who are members through partnerships is dealt with at LLM6100 and LLM6150.