The Finance Act 1994, Section 220 (Amendment) Regulations 2007

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend section 220 of the Finance Act 1994 (c. 9) which contains provisions for determining which profits or losses are treated as arising to a corporate member of Lloyd’s from its membership of an underwriting syndicate.

Subsection (2) of section 220 contains provisions defining which of the profits or losses arising to a corporate member of Lloyd’s from membership of an underwriting syndicate are treated as arising in an underwriting year (a calendar year).

Paragraph (b) of subsection (2) provides that the profits or losses arising to a corporate member in any underwriting year from assets held in a corporate member’s premium trust fund are those allocated, in that underwriting year and in accordance with the rules or practice of Lloyd’s, to any previous underwriting years the profits of which previous years are declared in the underwriting year.

The amendment made to section 220 of the Finance Act 1994 is made as a result of a change in the practice of Lloyd’s. Section 229(1)(b) of the Finance Act 1994 enables amendments to be made to Chapter 5 of Part 4 of the Finance Act 1994 (which includes section 220) in the event of any changes in the practice of Lloyd’s.

Regulation 1 provides that these Regulations shall have effect in relation to accounting periods ending on or after 1st July 2007.

Regulation 2 substitutes a new paragraph (b) into subsection (2) of section 220. The effect of the substitution is to add a second category of profits or losses treated as arising in the underwriting year. This second category is the profits or losses arising from assets held in the corporate member’s premium trust fund which are not allocated to any previous underwriting years.

A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.