The Lloyd’s Underwriters (Double Taxation Relief) (Corporate Members) Regulations 2006

Refunds of foreign tax

10.—(1) This regulation applies if—

(a) relief for foreign tax paid is given by way of credit against United Kingdom tax on profits arising from a corporate member’s underwriting business, and

(b) an amount of that foreign tax (“the repaid amount”) is subsequently repaid to the member.

(2) For the purposes of regulations 5 to 8 the repaid amount must be dealt with in accordance with paragraphs (3) and (4).

(3) For the purposes of regulation 7—

(a) the repaid amount is to be treated as if it were a foreign amount of tax repayable for the corresponding foreign period of accounting, and

(b) the following are to be adjusted by deducting the repaid amount—

(i) the foreign tax payable for the corresponding foreign period of accounting (see paragraphs (2) and (3) of regulation 7), and

(ii) the foreign amount of tax (see paragraphs (5) and (6) of regulation 7).

(4) For the purposes of regulation 8 the repaid amount (adjusted, if necessary, under paragraph (3)) must be deducted from the amount AASFT.

(5) Paragraph (6) applies if—

(a) any credit for foreign tax has been allowed to a corporate member under any arrangements, and

(b) the amount of that credit is subsequently rendered excessive by reason of an adjustment of the amount of any tax payable under the laws of a territory outside the United Kingdom.

(6) The corporate member shall give notice in writing to an Officer of Revenue and Customs that an adjustment has been made that has rendered the amount of the credit excessive.

(7) A notice under paragraph (6) must be given within one year from the time of the making of the adjustment.

(8) A corporate member which fails to comply with the requirements imposed by paragraphs (6) and (7) in relation to any adjustment shall be liable to a penalty of an amount not exceeding the amount by which the credit allowed has been rendered excessive by reason of the adjustment.

(9) If the condition in paragraph (10) is met, any assessments may be made as are necessary to ensure that the total amount of the corporate member’s income or chargeable gains is assessed, and the proper credit, if any, is given in respect of that income or those gains.

(10) The condition is that it appears that the assessment to corporation tax made on the corporate member in respect of the income or chargeable gains—

(a) is not made in respect of the full amount of that income or those gains, or

(b) is incorrect having regard to the repaid amount.

(11) Where the income is, or the chargeable gains are, entrusted to any person in the United Kingdom for payment, any such assessment may be made on the recipient of the income or gains; and, in the case of an assessment to corporation tax in respect of the income, may be assessed under Case VI of Schedule D.