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HMRC internal manual

Lloyd's Manual

Double taxation relief: corporate members: Regulations: outline

For accounting periods ending on or after 31 December 2006, the rules setout in the Lloyd’s Underwriters (Double Taxation Relief) (Corporate Members)Regulations 2006 (SI2006/3262) provide a simplified regime to enable corporate members tocope with the complexities of claiming relief for foreign tax suffered on Lloyd’sincome (for a description of the complexities see LLM7180).

The rules apply to corporate underwriting members of Lloyd’s. See LLM7030 for the treatment of individuals, including those who arepartners in SLP and LLP (incorporated partnership) members.

Under these rules, foreign tax payable by the corporate member for a territory’speriod of accounting is added to an ongoing general pool of foreign tax. If the foreignterritory’s tax rate exceeds the main UK CT rate, the amount of tax is restricted onentry into the pool. This scheme avoids the complexities and difficulties referred toabove. It is a modification of the usual source rule for double taxation relief, whichprovides that the credit that may be given for foreign tax paid on income arising inanother territory should not exceed the UK tax charge on the same income.

The approach described here applies only to double taxation relief given as a tax credit.A corporate member can decide each year, on a territory by territory basis, whether totake a deduction for foreign tax paid (INTM161050, see LLM10000)or to claim tax credit relief and hence put the relief into the tax pool.