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HMRC internal manual

Lloyd's Manual

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

Final tax year: deposit to repay

The final tax year for profits from membership of Lloyd’s is that corresponding to the calendar year in which the Name’s deposit is repaid to the Name or personal representatives (FA93/S179). For example, a Name last underwrites for the 2004 account, the results of which are declared in June 2007. After all outstanding losses and cash calls have been met, the Name’s deposit is released in January 2008. The final tax year is 2008-09.

In some instances, the deposit is not repaid to the Name or personal representatives, but to a third party. The final tax year for these cases is that corresponding to the calendar year in which the deposit is paid over to the third party, if later than the date given above (regulation 9(3) SI1995/351).

Where arrangements were made to satisfy the deposit requirement (that is, the deposit was met by way of letter of credit or bank guarantee) the final tax year is the tax year corresponding to the calendar year in which the arrangements are formally ended.

For Names who enter into quota share contracts, the final tax year is that corresponding to the calendar year the deposit is paid over, if later than the date given above.

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Invitation to apply for repayment of deposit

In some cases, the deposit may not be repaid even though all the underwriting obligations have been met. Here, the final tax year is given by the date Lloyd’s Members’ Services Unit writes to the Name inviting application for repayment of the deposit. If the letter is sent between 6 April and 10 October, the final tax year is that in which the letter is issued. For letters sent out between 11 October and 5 April, it is the following tax year (regulation 9(2), SI1995/351).

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Final tax year: no deposit to repay

Where there is no deposit to be repaid, or arrangements to release, the final tax year is that corresponding to the calendar year in which the final result of the Name’s last open syndicate is declared (regulation 9(5), SI1995/351).

This can happen when the Name’s deposit has been fully used to meet syndicate losses and cash calls, and also where a member has died and had an Estate Protection Plan (EPP - see LLM5190) in place. Under an EPP, it is common for the deposit to be repaid to the estate before all the syndicates have closed, any losses or cash calls being met under the terms of the EPP.

For instance, a Name last underwrites for the 2002 account. Some syndicates go into run off, eventually closing at 31 December 2006 and the results are declared in June 2007. The final tax year is 2007-2008.

In some instances, under the rules and practice of Lloyd’s, a Name’s membership of Lloyd’s may cease after the final result of the last open syndicate is declared. In this case, the final tax year is the tax year corresponding to the calendar year in which membership ceases, if that is later than the tax year given by regulation 9(5).

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Final tax year: Quota share

Where Names (or the personal representatives of a deceased Name) enter into quota share arrangements, their final open syndicate is deemed to close at the end of the calendar year the quota share contract is entered into (regulation 9(7), SI1995/351). The final tax year is then given by regulation 9(5) as that corresponding to the following calendar year. For example, if a Name signs a quota share contract in 2006 his final tax year is 2007-2008.