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HMRC internal manual

Lloyd's Manual

Conversion: Scottish limited partnerships: completing tax returns

Additional points need to be borne in mind in the two stage process of computing the partnership profits as though the SLP were both an individual Name and a corporate member (LLM6070). The sections below use the Partnership Tax Return for the year 2006-2007 as an example.

Savings, investment and other income

Apart from income from assets in ancillary trust funds (ATFs), taxed income (including foreign income from which UK tax has been deducted) should be returned for the period 6 April 2006 to 5 April 2007.

For untaxed UK and foreign income that arises on assets other than those in the partnership’s ATF, the amount arising in accounting period ended 31 December 2006 should be returned.

Disposal proceeds of chargeable assets

Details of any disposals of partnership ATF assets should be included in the Partnership Capital Gains Pages, as partners who are individuals are assessable to capital gains tax on their share of the gains.

Where ATFs of SLP members of Lloyd’s have been set up by one or more of the partners as individuals, any disposals should be reported by the individual partners on the Capital Gains Pages of their own SA Tax Return.

Income from ancillary trust funds

ATF income is trading income (LLM5040). For the income tax Partnership Statement, all income arising on ATF assets which is attributable to accounting period ended 31 December 2006 is included in the trading profits from membership of Lloyd’s. Whether the fund is established by the partnership itself or provided for the partnership by any of its members, it is not shown separately as savings income or foreign income.

If ATFs of individual Names are made interavailable to the SLP, the income on these funds remains the Lloyd’s trading income of those Names until the period of interavailability has finished, and should be returned by them on the Lloyd’s Pages of their own Tax Returns.

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Foreign income and tax

Pooling rules apply to foreign tax suffered where Lloyd’s income is subject to income tax (LLM7030). Under these rules, the trading profit of the partnership is treated as a single item of foreign income, and the Lloyd’s SLP foreign tax pool as the associated tax credit. The nominated partner should allocate to each partner who is an individual, a share of these two amounts. The individual partner can then claim tax credit relief or relief by deduction on the personal tax return. Similarly repayments of foreign tax (LLM7070) should be allocated by the nominated partner to every partner, who then have to report in personal tax returns according to how each of them had relief for the amount now refunded.

The nominated partner should show the nature of the income as ‘Lloyd’s SLP trading profits’ in the ‘Additional information’ box of the Partnership Tax Return, and each partner’s share of the partnership trading profits as ‘Share of foreign profits’ in the Partnership Trading Pages. Their ‘Share of foreign tax paid or suffered’ on this income is their share of the foreign tax pool.

Foreign tax arising on foreign source interest or dividends that is included in the partnership trading profits is not reported and allocated separately on the Partnership Foreign Pages.