For
accounting periods ending on or after 31 December
2006, the rules set out in the Lloyd’s Underwriters
(Double Taxation Relief) (Corporate Members) Regulations 2006
(SI2006/3262) provide a simplified regime to enable corporate
members to cope with the complexities of claiming relief for
foreign tax suffered on Lloyd’s income (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 are partners in SLP and LLP (incorporated
partnership) members.
Under these rules, foreign tax payable by the corporate
member for a territory’s period of accounting is added to an
ongoing general pool of foreign tax. If the foreign
territory’s tax rate exceeds the main UK CT rate, the amount
of tax is restricted on entry into the pool. This scheme avoids the
complexities and difficulties referred to above. It is a
modification of the usual source rule for double taxation relief,
which provides that the credit that may be given for foreign tax
paid on income arising in another 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 to take a
deduction for foreign tax paid (INTM161050, see
LLM10000) or to claim tax credit relief
and hence put the relief into the tax pool.
