LLM5230 - Names: special reserve funds: background
Since the late 1940s Names have been allowed to maintain reserves, built up from profits in good years, to meet losses in bad years, called special reserve funds. The original fund was replaced by a new style special reserve fund following legislation introduced in FA93/SCH20. From 2000, it has been referred to simply as a special reserve fund (SRF).
Broadly FA93 provides for a fund which a Name may (but is not required to) set up, into which a transfer of cash may be made in profitable underwriting years, and from which mandatory withdrawals must be made in years when there are losses or cash calls.
There are no provisions for special reserve funds for corporate members of Lloyd바카라 사이트™s. In this context that includes not only Namecos but also LLP and SLP members - only unlimited liability members, the traditional Names, may benefit. Neither may partners in LLP or SLP members make transfers or withdrawals based on their profits or losses from the partnership.
Administration
When a Name opens an SRF, they sign a trust deed which establishes a beneficial trust of which the Society of Lloyd바카라 사이트™s is the sole trustee. Lloyd바카라 사이트™s Members바카라 사이트™ Funds Department is responsible for the administration of all SRFs, which includes computing movements within each fund and managing and controlling the records of funds held.
Transfers into and out of the fund must be made in cash from the premium trust fund, except where assets were transferred to a new fund from an old, and when withdrawals are made on cessation (LLM5320).
SRF 바카라 사이트˜Arrangements바카라 사이트™
The SRF legislation provides for HMRC to agree operating arrangements that Lloyd바카라 사이트™s will apply when administering the funds. These arrangements are formalised in the SRF Manual produced by Lloyd바카라 사이트™s. The SRF Manual sets out the administrative arrangements necessary to effect the statutory provisions in FA93/SCH20 and the SRF regulations. The Manual details the responsibilities, authority and accountability of Lloyd바카라 사이트™s and the Names in operating the SRF.
Taxation Advice and Audit
The aggregate transfer into or out of a Name바카라 사이트™s SRF is reported to the Name by Lloyd바카라 사이트™s Members Services on the syndicate taxation advice, form CTA1, for the appropriate year of account. HMRC바카라 사이트™s Internal Audit team reviews the controls and management of the system to ensure the figures provided by Lloyd바카라 사이트™s MSU are accurate and comply with the requirements of the legislation.
Annual valuation
The SRF is valued annually at 31 December (or the last business day before) (FA93/SCH20/PARA6) by the Lloyd바카라 사이트™s Members바카라 사이트™ Fund Department. A copy of the valuation, listing all assets held and their relevant prices and values is sent to members바카라 사이트™ agents.