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HMRC internal manual

Lloyd's Manual

Capital gains: Names: syndicate capacity: MAPAs: years of assessment up to and including 1998-99 (2)

Transfer of bespoke capacity to MAPA operator

Transfers of bespoke capacity to a MAPA operator are treated as disposals at marketvalue on the date of transfer. This will generally be the date when the Name isirrevocably committed to underwriting via the MAPA for the following account, 31 Augustfor the 1995 and 1996 accounts and 30 September for the 1997 to 1999 accounts. These datesapply rather than 1 January of the following year, when the right is taken up by the MAPAmembers. In return for the bespoke capacity, the Name acquires a range of participationsin each of the syndicates in which the MAPA is involved.

Cash distributions from MAPA operator

A Name who stops underwriting via the MAPA and receives a cash distribution hasdisposed of participations held via the MAPA and the disposal proceeds are the cashreceived. The cost of acquisition of the syndicate capacity that was held via the MAPA istaken as the cash originally subscribed, or the market value of any bespoke capacitytransferred to the operator by way of subscription, plus the value of any additionalsubscriptions, either in cash or the market value of bespoke capacity at the date oftransfer to the MAPA operator.

If the Name reduces the level of participation via the MAPA and receives a distribution incash, this is also a disposal of syndicate capacity held via the MAPA. The cost ofacquisition is worked out using a modified A/A+B formula for part disposals (see LLM8060).

If a Name holds capacity in a particular syndicate on a bespoke basis as well as via aMAPA, the capacity held via the MAPA is ignored when working out the gains on disposal ofcapacity held in that syndicate on a bespoke basis. If a Name is a member of more than oneMAPA and two or more of the MAPAs are involved in the same syndicate, the capacity heldvia one MAPA operator is regarded as a different asset from the capacity held via theother(s) and different also from any bespoke capacity the Name may also have in thatsyndicate.

See LLM8140 for the tax treatment of non-cash distributions froma MAPA operator.