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HMRC internal manual

Lloyd's Manual

HM Revenue & Customs
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Conversion: Schedule 20A FA93: SLP and LLP conversions

FA93/SCH20A/PARA6 sets out four conditions which must be satisfied for the relief in Part 2 to apply. These are similar to the conditions in Part 1, except for the share ownership and control conditions which are not relevant to a partnership.

Conditions 1 and 2

Conditions 1 and 2 require the Name to give notice of resignation, and to transfer all outstanding syndicate capacity to the “successor partnership”. (Condition 4 requires the successor partnership to start underwriting in the year immediately following the Name’s last underwriting year.)

For conversions on or after 6 April 2004, the term ’successor partnership’ is used to mean an SLP that is an underwriting member of Lloyd’s. With effect from 14 February 2006, the meaning of successor partnership is extended to include Limited Liability Partnerships (LLM6150).

Condition 3

Condition 3 sets out a similar requirement to the ownership and control conditions for Nameco conversions. This is that the Name is the only person who transfers syndicate capacity under a conversion scheme to the SLP/LLP. There can be other partners in the SLP/LLP; but in line with the reliefs in Part 1, relief for the carry forward of trading losses is restricted to the one active Name in the partnership.

Carry forward of loss relief in SLP/LLP conversions

FA93/SCH20A/PARA7 applies where the Name receives a share of partnership profits and was beneficially entitled to more than 50% of those profits. This reflects the requirement in the Part 1 reliefs that the share ownership and control conditions remain throughout the year for which the claim is made. Paragraph 7 then deems there to be continuity between the Name’s underwriting and that of the SLP/LLP for the purposes of setting off the pre-conversion losses under ICTA88/S385 and ITA07/S83. In other words, the Name can set trading losses brought forward against the share of the profits from the partnership’s underwriting trade.