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HMRC internal manual

Lloyd's Manual

Double taxation relief: individual Names: allocation of foreign tax: US and Canadian tax

US federal tax

The payment of US tax is administered centrally by Lloyd’s Members Support Unit(MSU). The tax available for relief and the UK tax year to which it is allocated arereported to Names on the syndicate taxation advice CTA1 for the appropriate year.

US tax due to be paid in one calendar year is allocated to the UK tax year correspondingto the calendar year next but two after the calendar year in which it was due. Regulationsthen permit double tax relief on that basis (regulation 6 SI1997/405). For instance, UStax paid in 2003 is included in the foreign tax pool of 2005-06, and will appear on theName’s CTA1 (2005).

The rationale for this is that US tax paid in 2003 will be in respect of Lloyd’s USprofits of calendar year 2003. The profits in the USA from membership of Lloyd’s aremeasured as though syndicates are ongoing businesses, and not discrete annual ventures.This means that the profits attributable to any particular US tax year reflect elements ofprofits that arise in three or more different years of assessment for UK purposes. US 2003profits will include some of the profits from the 2001, 2002 and 2003 accounts. Ratherthan attempt to disaggregate the US tax and apportion it to the UK tax years where theprofits arise, the tax is attributed to the account which contributes the largest elementof the US measure of profits, namely the middle year. In this example it is the 2002account the profits of which for UK tax purposes arise in 2005-06.

Canadian federal tax

The payment of Canadian tax is also administered centrally by Lloyd’s MSU. The taxavailable for relief and the UK tax year to which it is allocated are reported to Names onthe syndicate taxation advice CTA1 for the appropriate year.

The measure of Lloyd’s profits which arises in Canada is based, like ours, on theprofit of the year of account, so the difficulties that result from the US measure ofLloyd’s US profits do not arise with Canadian foreign tax.

Details of allocation of Canadian tax are given by regulation 7 SI1997/405.