LLM6110 | Conversion: Scottish limited partnerships: terminal loss relief

The rules for terminal loss relief (‘TLR’) when an individual ceases to be a member of the SLP mirror the TLR rules (LLM5390) which apply when an individual ceases to be a member of Lloyd’s. Regulation 10(2) SI1997/2681 deems the individual partner’s trade to cease on 5 April of the final tax year in which his share of profits from the partnership includes the results of one or more syndicates. The loss of the last 12 months is then the retiring partner’s allocated share of the tax-adjusted loss of the accounting period ending on 31 December immediately before the date of deemed cessation. The loss is then available for relief against underwriting profits of the three preceding tax years, taking a later year before an earlier year, in the same way as for terminal losses sustained in any other trade under ICTA88/S388 and ITA07/S89.

In the example in LLM6100 the final tax year that the retiring partner has syndicate results in his share of the partnership profit is 2008-09. The deemed date of cessation is 5 April 2009 and the loss of the last 12 months is his share of the tax-adjusted loss of accounting period ending 31 December 2008. The loss can be set against the retiring partner’s other income of 2007-08, 2006-07 or 2005-06, taking a later year before an earlier year.