LLM7080 - 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 the Name’s final tax year as a member of Lloyd’s are included in the Lloyd’s foreign tax pool for the final year, and relieved in the same way as the rest of that year’s pool. This is because the allocation rules in regulations 4 to 7 SI1997/405 will 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 corresponding to a Name’s final tax year. These will be treated either as refunds received in the final 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 post cessation receipts legislation, at Part 2 Chapter 18 ITTOIA. This means that any refund will be taxed as income not otherwise charged, the former Case VI, chargeable for the year in which it is received, and any expenses which are allowable can be set against the receipt. This applies with effect from 1999-2000, and is a consequence of the Revenue’s change of view on the treatment of post cessation receipts for Lloyd’s members (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 tax credit relief. A period of six years is allowed from the time when all necessary adjustments, assessments, etc were made which allowed the amount of tax credit relief (if any) to be given.