INCOME TAX Preliminary Citation, commencement and effect 1 These Regulations may be cited as the Lloyd’s Underwriters (Scottish Limited Partnerships) (Tax) Regulations 1997, shall come into force on 1st December 1997 and shall have effect with respect to accounting periods of Lloyd’s Scottish limited partnerships ending on or after that date. Interpretation 2 1 In these Regulations unless the context otherwise requires— “accounting period” in relation to a Lloyd’s Scottish limited partnership has the meaning given by regulation 6(2); “corporate member” has the meaning given by section 230(1) of the Finance Act 1994; “Lloyd’s Scottish limited partnership” means a limited partnership formed under the laws of Scotland which is a member of Lloyd's; “member” means a member of Lloyd’s who is or has been an underwriting member; “the Taxes Act ” means the Income and Corporation Taxes Act 1988 . 2 For the purposes of these Regulations an underwriting year and a year of assessment shall be deemed to correspond to each other if the underwriting year ends in the year of assessment. Provisions relating to both individual and corporate partners in aLloyd’s Scottish limited partnership Operation of partnership assessment rules 3 1 Where section 111(2) of the Taxes Act applies in relation to a Lloyd’s Scottish limited partnership— a the provisions of Chapter III of Part II of the Finance Act 1993 shall apply, subject to the amendments made by these Regulations, as if the partnership were a member who is an individual; b the Lloyd’s Underwriters (Tax) Regulations 1995 shall have effect in relation to that partnership— i as if it were a member who is an individual, and ii with the omission of regulations 9 to 17; c the Lloyd’s Underwriters (Double Taxation Relief) Regulations 1997 shall have effect in relation to that partnership as if it were a member who is an individual. 2 Where section 114(1) of the Taxes Act applies in relation to a Lloyd’s Scottish limited partnership— a the provisions of Chapter V of Part IV of the Finance Act 1994 shall apply, subject to the amendments made by these Regulations, as if the partnership were a member which is a corporate member; b the Lloyd’s Underwriters (Tax) Regulations 1995 shall have effect in relation to that partnership— i as if it were a member which is a corporate member, and ii with the omission of regulations 9 to 17. Disapplication of cessation provisions 4 1 Sections 179 and 179A of the Finance Act 1993 shall not apply in relation to a Lloyd’s Scottish limited partnership which, by virtue of regulation 3(1), is treated as a member who is an individual. 2 Section 227 of the Finance Act 1994 shall not apply in relation to a Lloyd’s Scottish limited partnership which, by virtue of regulation 3(2), is treated as a member which is a corporate member. Ancillary trust funds relating to a Lloyd’s Scottish limited partnership 5 1 An ancillary trust fund set up in relation to a Lloyd’s Scottish limited partnership shall be regarded as an ancillary trust fund of that partnership, irrespective of whether the fund is established by the partnership itself or by one or more of the partners in the partnership; and, subject to the modification specified in paragraph (2), section 176 of the Finance Act 1993 and section 223 of the Finance Act 1994 shall apply accordingly. 2 Subsections (3) and (4) of section 176 of the Finance Act 1993 shall be omitted. 3 In paragraph (1) “ancillary trust fund”— a where regulation 3(1) applies, has the meaning given by section 184(1) of the Finance Act 1993 ; b where regulation 3(2) applies, has the meaning given by section 230(1) of the Finance Act 1994. Provisions relating to individual partners in a Lloyd’s Scottish limited partnership Basis of assessment 6 1 Where regulation 3(1) applies in relation to a Lloyd’s Scottish limited partnership— a section 60(2) to (5), and sections 61 to 63A, of the Taxes Act shall not apply in relation to that partnership; b section 172 of the Finance Act 1993 shall apply in relation to that partnership as if— i in each of paragraphs (a) and (b) of subsection (1) of that section for the reference to the corresponding underwriting year there were substituted a reference to the accounting period ending in the corresponding underwriting year; ii in paragraph (c) of that subsection for the reference to profits or losses derived from payments made or received in the corresponding underwriting year there were substituted a reference to profits or losses attributable to the accounting period ending in the corresponding underwriting year. 2 In paragraph (1)(b)(i) and (ii) “accounting period” in relation to a Lloyd’s Scottish limited partnership means the period— a beginning on the 1st January in each year, or the date on which the partnership was formed (if later in that year), and b ending on— i the 31st December in that year, or the date when the partnership is terminated (if earlier), or ii where the partnership was formed later than 1st January in that year, the 31st December in the following year, or the date when the partnership is terminated (if earlier). Disapplication of section 175 of the Finance Act 1993 (special reserve funds) 7 1 Section 175 of, and Schedule 20 to, the Finance Act 1993 shall not apply in relation to a Lloyd’s Scottish limited partnership which, by virtue of regulation 3(1), is treated as a member who is an individual. 2 Paragraph (1) shall not prevent the setting up of a special reserve fund in relation to an individual who is both a member of Lloyd’s and a partner in a Lloyd’s Scottish limited partnership, but in such a case the special reserve fund shall take account only of the underwriting business carried on by that person as a member. Disapplication of section 180 of the Finance Act 1993 (underwriting profits to be earned income) 8 Section 180 of the Finance Act 1993 shall not apply in relation to the profits arising to an individual as a partner in a Lloyd’s Scottish limited partnership. Death of partner 9 1 This regulation applies where— a regulation 3(1) applies in relation to a Lloyd’s Scottish limited partnership, and b an individual who is a partner in the partnership dies. 2 The carrying on of the deceased partner’s partnership business by his personal representatives shall not be treated for the purposes of the Income Tax Acts as a change in the persons engaged in the carrying on of that business. 3 The deceased partner’s partnership business shall be treated for the purposes of the Income Tax Acts as continuing until either— a any security provided by him in relation to that business is released or repaid by Lloyd’s to his personal representatives, or b his interest in the partnership is assigned by his personal representatives. Terminal loss relief 10 1 This regulation applies where— a regulation 3(1) applies in relation to a Lloyd’s Scottish limited partnership, and b an individual who is a partner in the partnership ceases to carry on his partnership business, whether by reason of death or otherwise. 2 The date on which the individual’s partnership business is permanently discontinued for the purposes of section 388 of the Taxes Act (carry-back of terminal losses) (“section 388”) shall be deemed to be the 5th April in the last year of assessment in which his share of the profits or losses of that business arising from the partnership’s membership of one or more syndicates, or from assets forming part of a premiums trust fund, fall to be included in a computation under section 111 of the Taxes Act. 3 A partner may not make more than one claim under section 388 in respect of the same partnership business. Nick Montagu C W Corlett Two of the Commissioners of Inland Revenue 7th November 1997