Names are taxed on the profits or losses arising in a
‘corresponding year’. Syndicate results and premium
trust fund (PTF) income are taxed on the amounts
‘declared’ in the corresponding year. Ancillary trust
fund and non-syndicate income and expenses are taxed on the amounts
received and paid in the corresponding year (
LLM5300).
The corresponding year concept determines the timing of
assessments on the Lloyd’s underwriting business. An
underwriting year and a tax year correspond to each other if the
underwriting year ends in the tax year (FA93/S184 (2)). An
underwriting year for the purposes of the Lloyd’s legislation
is the same as a calendar year (FA93/S184 (1)(d)). Thus, the
underwriting year ending 31 December 2004 corresponds to the tax
year 2004-05.
This concept applies to all aspects of the taxation of
Lloyd’s trading income, but not for capital gains tax
purposes.
Syndicate results, and PTF income, are treated as arising in the
calendar year in which they are declared and are taxable in the tax
year corresponding to that calendar year (FA93/S172 (1)(a)). For
instance, a 2004 syndicate closes 31 December 2006 and
declares its results in May 2007. The results of that syndicate are
included in the trading results for 2007-08, the tax year
corresponding with calendar year 2007 when the results were
declared.
The declaration year basis also applies to the results of
run-off accounts. For instance, if a 2004 syndicate does not close
and produces run-off accounts for the year to 31 December 2007. The
results of this run-off account are declared in May 2008 and are
taxable in the corresponding tax year, 2008-09.
