LLM8130 - 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 market value on the date of transfer. This will generally be the date when the Name is irrevocably committed to underwriting via the MAPA for the following account, 31 August for the 1995 and 1996 accounts and 30 September for the 1997 to 1999 accounts. These dates apply rather than 1 January of the following year, when the right is taken up by the MAPA members. In return for the bespoke capacity, the Name acquires a range of participations in 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 has disposed of participations held via the MAPA and the disposal proceeds are the cash received. The cost of acquisition of the syndicate capacity that was held via the MAPA is taken as the cash originally subscribed, or the market value of any bespoke capacity transferred to the operator by way of subscription, plus the value of any additional subscriptions, either in cash or the market value of bespoke capacity at the date of transfer to the MAPA operator.

If the Name reduces the level of participation via the MAPA and receives a distribution in cash, this is also a disposal of syndicate capacity held via the MAPA. The cost of acquisition 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 a MAPA, the capacity held via the MAPA is ignored when working out the gains on disposal of capacity held in that syndicate on a bespoke basis. If a Name is a member of more than one MAPA and two or more of the MAPAs are involved in the same syndicate, the capacity held via one MAPA operator is regarded as a different asset from the capacity held via the other(s) and different also from any bespoke capacity the Name may also have in that syndicate.

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