LLM5320 - Names: basis of assessment: cessation: introduction
Resignation
To stop underwriting as a member of Lloyd’s, an individual
Name resigns with effect from the following 31 December. This means
that the Name continues to participate in syndicates up until the
end of the account in which resignation was tendered, and the Name
does not take any new business for subsequent accounts. Before
severing connections with Lloyd’s, the Name must wait until
all the syndicates for all the accounts in which that individual
participated have closed, outstanding liabilities to Lloyd’s
have been met and the deposit has been released. This is usually a
minimum of three years after resignation.
Cessation is therefore linked with the year in which the
Name’s commercial involvement with the Lloyd’s market
ends, and not with the date of resignation from Lloyd’s.
Break in trade
Once an individual has become an underwriting member of
Lloyd’s, it is usual to participate in syndicates for every
year continuously until resignation. But in some circumstances,
there may be a break of one or more years when a Name does not
underwrite new business. For example, a Name may for personal
reasons choose not to underwrite for one or more years, but wish to
resume underwriting at some time in the future, or Lloyd’s
may suspend a Name if Lloyd’s rules or practices have been
disregarded.
Where the name has not resigned membership of Lloyd’s,
these gaps are treated as no more than temporary breaks in the
trade, even though the Name may be participating in a different
range of syndicates after the break compared with those before the
break.
Terminal loss relief (
LLM5390) is not available for losses in
the last year before the gap as the condition in ICTA88/S388 (1),
that trade is permanently discontinued, is not met. There has been
no commencement of new individual Names from 2003 onwards, and
neither would relief be available under ICTA88/S381 for losses
sustained in the first four years following resumption of active
underwriting, as relief is only available for the tax year in which
an individual first carries on the trade (ICTA88/S381 (1)(a)).
A Name who permanently resigns from 2003 cannot reapply for
membership as an individual Name.
Section 179 FA 1993 and SI 1995/351
The basic rule on cessation is given by section FA93/S179 (2). The final tax year is the one that corresponds to the underwriting year in which the Lloyd’s Deposit is repaid. Regulations in SI1995/351 give more detailed rules.
Death
See
LLM5340 for cessation on death.
Cessation for investors who are members through partnerships
is dealt with at
LLM6100 and
LLM6150.
