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HMRC internal manual

Lloyd's Manual

Double taxation relief: individual Names: refunds of foreign tax after final year

Final tax year

Payments of foreign tax made after the end of the calendar year corresponding to theName’s final tax year as a member of Lloyd’s are included in the Lloyd’sforeign tax pool for the final year, and relieved in the same way as the rest of thatyear’s pool. This is because the allocation rules in regulations 4 to 7 SI1997/405will generally allocate that foreign tax to a tax year prior to cessation.

Refunds received after the final year

Refunds of foreign tax may be received after the end of the calendar year correspondingto a Name’s final tax year. These will be treated either as refunds received in thefinal tax year, or as post cessation receipts of the year in which they are received,depending on how double taxation relief was originally given.

Relief originally given by deduction

Where relief was originally given by deduction, the refund is taxed under the postcessation receipts legislation, at Part 2 Chapter 18 ITTOIA. This means that any refundwill be taxed as income not otherwise charged, the former Case VI, chargeable for the yearin which it is received, and any expenses which are allowable can be set against thereceipt. This applies with effect from 1999-2000, and is a consequence of theRevenue’s change of view on the treatment of post cessation receipts for Lloyd’smembers (see LLM5360).

Relief given as tax credit

Where the relief was originally given by credit against UK tax on Lloyd’s profits,the refund is added to the tax chargeable on the Lloyd’s profits of the final year(regulation 9(4)(a) SI1997/405). This means that the final year may need to be re-opened.ICTA88/S806 extends time limits for assessments when adjustments have been made to taxcredit relief. A period of six years is allowed from the time when all necessaryadjustments, assessments, etc were made which allowed the amount of tax credit relief (ifany) to be given.