HMRC internal manual

Lloyd's Manual

LLM8160 - Capital gains: Names: syndicate capacity: MAPAs: years of assessment 1999-2000 onwards (2)

Disposals of MAPA capacity

A Name is only treated as having made a disposal of capacity held in the MAPA incertain circumstances, which are set out in FA99/S82. A Name who receives any amount fromthe MAPA, either in cash or as syndicate capacity, will be treated as having made adisposal (FA99/S82 (6)).

There are a number of different events that can lead to the member receiving cash orcapacity from the MAPA, including the following

  • If a Name reduces the MAPA participation, they may receive cash or capacity. This will either be a complete disposal if the Name has left the MAPA completely, or a part- disposal, if the participation in the MAPA is reduced. The gain or loss on a part- disposal is calculated using the normal part-disposal provisions.
  • If a Name receives a cash distribution from the MAPA manager, this is a disposal for CGT purposes.
  • If a MAPA disbands, so that the Name holds capacity on a bespoke basis that was formerly held via a MAPA, this is a disposal for CGT purposes.

The disposal proceeds for CGT purposes are the consideration received, in whatever form(FA99/S82 (6)). If the member receives capacity, then the consideration received is themarket value of the capacity at the time of transfer. This market value will also be theacquisition cost to be used for CGT purposes in the event of a later disposal. Thisprovision applies whether sums are actually paid to the member, or paid into any fundcontrolled by the member.

The Name will also be treated as having made a disposal under TCGA92/S24 (2) if all of thecapacity held via the MAPA has become worthless. This only applies if all of the syndicatecapacity has become worthless, and not, for example, if capacity in just one of thesyndicates held via the MAPA has become worthless.

Acquisitions or disposals by the MAPA manager

Disposals for CGT purposes only take place when a Name receives sums from the MAPAmanager, or when a member leaves a MAPA. It follows that disposals of syndicate capacityby the MAPA manager are not chargeable events for CGT purposes, provided that no cash ispaid to the Names on the MAPA.

Similarly, a Name incurs expenditure for CGT purposes when either cash or capacity istransferred into the MAPA. It follows that if neither of these has taken place,acquisitions of capacity by the MAPA manager are not chargeable events for the purposes ofCGT.

Mergers of MAPAs

Mergers of MAPAs are not chargeable events for the purposes of CGT, provided that aName does not either receive any sums from the MAPAs at the time of the merger, orcontribute any additional sums, either as cash or capacity.