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Lloyd’s

There are a number of issues that particularly affect the Lloyd’s market.

Prevention of loss buying of ceasing Lloyd’s corporate members

Where a corporate member has ceased to underwrite forward, a restriction will be placed on its ability to surrender tax losses relating to its final year of account. The corporate member will not be able to surrender losses to another company unless the group relief common ownership conditions have been in place from 31 December in the first year of the year of account onwards. So, for example, if a member’s final year of account is 2007, which will give rise to a tax loss in 2010, the necessary group relief relationship has to be in place from 31 December 2007 onwards. The new rules will apply to changes of ownership on or after 21 March 2007.
 

Reorganisation of Lloyd’s groups

As announced in the PBR, there will be a measure to allow Lloyd’s corporate members to transfer carried forward trading losses from one company to another under the same control as part of a group reconstruction. For this purpose a member will be treated as succeeding to another’s trade when one group company ceases to underwrite forward and another takes on its syndicate capacity. The legislation is expected to follow section 343 ICTA 1988 in making the transfer of loss carry forward mandatory if the conditions are met. Although details are still to be finalised it is expected that unused trading losses will transfer to the successor company at the end of the year following the normal closure date of its last year of account. (So if a member’s final year of account was 2004, with another group member taking on its capacity from 2005, any unused losses would transfer as at 31 December 2007.)