LLM8080 - Capital gains: Names: syndicate capacity: disposals: reversion to managing agent

If a Name chooses not to change allocated capacity in line with an expansion of the syndicate stamp, or for some other reason does not or cannot sell his capacity in that year’s auctions, then the capacity reverts to the managing agent. If the whole of the capacity in one particular syndicate reverts to the managing agent in this way, there has been a disposal of a chargeable asset, with nil proceeds. If the Name paid for the capacity in the first place, then there will be a loss on disposal equal to the original purchase price plus allowable costs.

If only part of the capacity in a particular syndicate reverts, there has been a part disposal of an asset for nil proceeds and there will be a loss on disposal of that part.

For instance, in August 2005, a Name buys £50,000 capacity in syndicate X (2006) for £2,500. For the 2007 account, £20,000 of that capacity reverts to the managing agent. The capital gains computation will be: