Citation, commencement and effect

1. —(1) These Regulations may be cited as the Lloyd’s Underwriters (Equalisation Reserves) (Tax) Regulations 2009 and shall come into force on 1st September 2009.

(2) These Regulations have effect in relation to accounting periods ending on or after 31st December 2008.

Interpretation

2. In these Regulations—

(a) “underwriting business” means, in relation to a corporate member or a partnership member, its underwriting business as a member of Lloyd’s; and

(b) references to section 444BA are references to section 444BA of the Income and Corporation Taxes Act 1988 (equalisation reserves for general business)( 2 ).

Reserves maintained by Lloyd’s members which are equivalent to equalisation reserves

3. —(1) This regulation applies in a case where an equivalent Lloyd’s reserve is maintained by a corporate member or a partnership member.

(2) For the purposes of this regulation a corporate member or a partnership member maintains an equivalent Lloyd’s reserve if, and only if, the reserve is maintained by the member as if the equalisation reserves rules referred to in subsection (11) of section 444BA apply to the member notwithstanding that those rules do not otherwise apply to the member.

(3) Where this regulation applies, section 444BA shall apply with the modifications specified in regulation 4.

Modifications of section 444BA Income and Corporation Taxes Act 1988 and equalisation reserves rules

4. —(1) The modifications to section 444BA referred to in regulation 3 are as follows—

(a) in subsection (1), the words “and to sections 444BB to 444BD” shall be treated as omitted;

(b) subject to paragraph (2), the equalisation reserves rules shall be treated as applying to the corporate member or partnership member (as the case may be);

(c) references to “an insurance company” and “the insurance company” shall be treated as references to the corporate member or the partnership member (as the case may be);

(d) references to “business” shall be treated as references to the underwriting business of the corporate member or the partnership member (as the case may be);

(e) references to an “equalisation reserve” shall be treated as references to an “equivalent Lloyd’s reserve”; and

(f) subsection (10) shall be treated as omitted.

(2) For the purposes of the equalisation reserves rules treated as applied by paragraph (1), any calculation of the average of the amount of the annualised net written premiums shall be made without reference to any period prior to 1st January 2005.

(3) In paragraph (2), the reference to “annualised net written premiums” has the meaning given by the equalisation reserves rules.

Further modification for purposes of computing profits or losses arising in the first accounting period to which these Regulations apply

5. —(1) This regulation applies for the purposes of computing the profits or losses of a corporate member or a partnership member arising in the first accounting period of the member in relation to which these Regulations have effect.

(2) In computing the profits or losses arising in the accounting period in accordance with section 444BA (as applied by and with the modifications made by these Regulations) any amount—

(a) which is transferred into the equivalent Lloyd’s reserve before or after the date these Regulations come into force,

(b) which is an amount to which subsection (2)(a) of section 444BA applies by virtue of these Regulations, and

(c) which is transferred into the reserve in respect of underwriting business written on or after 1st January 2005 and before 1st January 2006,

shall be deductible for the purposes of computing the profits or losses for that accounting period.