Lloyd’s SLPs are usually mixed partnerships involving
individuals and at least one limited company (the general partner).
The partnership rules in Part 9 of ITTOIA 2005 and Chapter 7 of
Part 4 ICTA 1988 provide for the profit or loss of each class of
partner to be arrived at separately for tax purposes, by regarding
the partnership first as if it were an individual and then secondly
as if it were a company. Regulation 3 SI1997/2681 provides the main
rule governing the interaction of this principle with the specific
Lloyd’s legislation.
For the purpose of computing the profits of individual partners, the SLP is regarded as if it were itself an individual member of Lloyd’s. The normal rules on individual Names in FA93 and the relevant regulations are then applied (subject to the modifications described below) and the proportion of the resulting profit or loss that corresponds to the share of the commercial profit or loss allocated to the individual partners taken together is allocated among them.
All receipts and expenses relating to a partner in an SLP must be included in the partnership return. If individual or company partners are also members of Lloyd’s in their own right any expenses relating to their own membership of Lloyd’s must be taken into account separately in their own return, as such partners conduct two separate trades, one as an underwriting member of Lloyd’s and the other as a partner in an underwriting business carried on by an SLP.
The only corporate partners in SLPs which have so far been set
up are general partners. Computations for these partners are mainly
fairly straightforward as income and gains are not attributed to
the general partner. The general partner may in practice only
receive a fixed fee from the other partners. In some cases the
general partner receives no partnership income. In these cases,
fees are paid directly to the corporate parent involved in
management of the SLPs.
Should a company become a limited partner in a SLP, for the
purpose of computing the profits of the corporate partner the SLP
is regarded as if it were itself a corporate member of
Lloyd’s. The normal rules about corporate members in FA94 and
the relevant regulations are then applied (subject to the
modifications described below) and the proportion of the resulting
profit or loss that corresponds to the share of the commercial
profit or loss allocated to the corporate partners taken together
is allocated among the corporate partners.
If any of the members of the partnership are non-UK resident, it is necessary to complete a third Partnership Statement and associated pages treating the partnership as though it were an individual not resident in the UK, but only if this would result in different figures. This will be the case where any of the members of the partnership are not ordinarily resident and non- domiciled. This is because gains or losses on FOTRA securities are excluded from UK tax for non-resident and non-domiciled individuals by FA96/S154 (2), and are therefore excluded from the computation of partnership profits.
