LLM6000 onwards explains
‘conversion’ in more detail.
When individual Names convert to limited liability vehicles,
they may do this by becoming a shareholder in a corporate member,
or by becoming a partner in a Scottish limited partnership or
Limited Liability Partnership member of Lloyd’s. As part of
conversion schemes, Names commonly transfer their syndicate
capacity to the corporate or SLP/LLP member, and their Funds at
Lloyd’s become interavailable. Transfers to companies are
disposals for capital gains tax purposes. Roll-over relief may be
available on such a transfer in some circumstances, although the
gain may not be rolled over into the shares in the corporate member
itself (
LLM8220).
For transfers to SLPs or LLPs, a capital gains tax charge
will only arise if the transfer is otherwise than by way of a
bargain made at arm’s length (paragraph 7 SP/D12). A gain
will not arise provided that all of the value of the capacity
transferred (as ascertained and registered for the purposes of the
Limited Partnerships Act 1907 or Limited Liability Partnerships Act
2000) is credited to the capital account in the books of the
partnership and not revalued, and the Name’s account is not
subsequently credited (except on account of a further contribution
of capacity or cash by way of capital) or debited until they leave
the partnership.
See
LLM6120 for more details on the
application of capital gains tax rules to SLPs.
See LLM6160 for guidance on the income tax and capital gains tax reliefs introduced by FA04 for Names who convert to limited liability underwriting under Lloyd’s conversion schemes on or after 6 April 2004.
