Part II Income Tax, Corporation Tax and Capital Gains Tax

C2C3 Chapter III Lloyd’s Underwriters etc.

Annotations:
Modifications etc. (not altering text)
C2

Pt. II Chapter III applied (1.5.1995 with application as mentioned in s. 127(19) of the amending Act) by 1995 c. 4, s. 127(16)(a)(19)

C3

Pt. II Chapter III modified (1.12.1997 with effect with respect to accounting periods of Lloyd's Scottish limited partnerships ending on or after that date) by S.I. 1997/2681, reg. 3(1)(a)

Other special cases

178 Stop-loss and quota share insurance.

1

In computing for the purposes of income tax the profits of a member’s underwriting business, each of the following shall be deductible as an expense, namely—

a

any premium payable by him under a stop-loss insurance, and any repayment of insurance money paid to him under such an insurance;

b

any amount payable by him into the High Level Stop Loss Fund, and any repayment of an amount paid to him out of that Fund; and

F1c

where an amount is payable by him under a quota share contract—

i

so much of that amount as exceeds the amount of transferred losses that are declared on or before the date the contract takes effect (“the declared amount”), or

ii

if the contract does not take effect, the amount so payable under the contract.

2

Subject to subsection (3) below, each of the following, namely—

a

any insurance money payable to F2a member under a stop-loss insurance in respect of a loss in his underwriting business; and

b

any amount payable to a member out of the High Level Stop Loss Fund in respect of such a loss,

shall be treated as a trading receipt in computing the profits arising from that business for the year of assessment which corresponds to the underwriting year in which the loss F3was declared.

C13

Where, as respects the payment of any such insurance money or amount as is mentioned in subsection (2) above—

a

the inspector is not notified of the payment at least 30 days before the time after which any assessment or further assessment of profits for the year of assessment is precluded by section 34 of the Management Act (ordinary time limit of F64 years), and

b

the inspector is not entitled, after that time, to make any such assessment or further assessment by virtue of section 36 (F7loss of tax brought about carelessly or deliberately) or 40(2) (assessment on personal representatives) of that Act,

that subsection shall have effect in relation to that insurance money or amount as if it referred instead to the year of assessment which corresponds to the underwriting year in which the payment is made.

F43A

Where the amount payable by a member under a quota share contract is less than the declared amount, the difference between the two amounts shall be treated as a trading receipt in computing the profits arising from the member’s underwriting business in the year of assessment which corresponds to the underwriting year in which the contract takes effect.

3B

Where a member has entered a quota share contract, any amount paid by him to cover a cash call in respect of transferred losses that are not declared at the time the contract takes effect shall be treated—

a

for the purposes of subsection (1)(c)(i) and (3A) above, as an amount payable under the contract, and

b

for the purposes of section 172, as a payment made at the time the contract takes effect.

F54

For the purposes of this section—

  • “cash call” has the same meaning as in Part 1 of Schedule 20 to this Act;

  • “quota share contract” means any contract between a member and another person which—

    1. a

      is made in accordance with the rules or practice of Lloyd’s, and

    2. b

      provides for that other person to take over any rights and liabilities of the member under any of the syndicates of which he is a member;

    and where the taking over of a member’s rights and liabilities is conditional upon the occurrence of any event, the contract does not take effect until that event occurs; and

  • “transferred loss”, in relation to such a contract, means a loss for which that other person takes over liability under the contract (disregarding, in the case of a loss that has been declared at the time it is taken over, any part of it in respect of which the member has paid a cash call before that time).