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HMRC internal manual

Lloyd's Manual

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HM Revenue & Customs
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Capital gains: Names: syndicate capacity: negligible value

In some instances there will not be a successor syndicate in which Names can participate and their participation rights will therefore cease to exist. For Names who purchased the capacity at auction or from a managing agent, and in some circumstances received it as a distribution from a MAPA operator (LLM8110+), a negligible value claim under TCGA92/S24 (2) can be made to establish a loss by reference to the price originally paid. See CG13118+ (LLM10000) for more detail on how to deal with negligible value claims.

These claims can be made when the value of an asset has become negligible, which in practice is when its value falls considerably below 5% of its purchase price. If the Name had first participated on the syndicate for the 1995 account or earlier, the purchase price was nil. No negligible value claim is possible as there has been no reduction in value to the Name, even though capacity in the syndicate may have had some value at auctions prior to the cessation of the syndicate.

Where a Name participated on the syndicate for the 1995 underwriting account or before, and the syndicate ceased to take in new business before the advent of capacity auctions (1995 account or earlier), the member never had the right to participate in a successor syndicate, since these rights did not exist until created by the 1995 Byelaw. There is therefore no chargeable asset on whose disposal a gain or loss can arise.

Limited tenancy capacity

This is explained at LLM8080. It is generally a wasting asset and in that case will not give rise to a negligible value claim.