LLM8150 - Capital gains: Names: syndicate capacity: MAPAs: years of assessment 1999-2000 onwards (1)

For 1999-2000 onwards, the legislation in FA89/S82 to FA89/S84 applies to MAPAs.

MAPA treated as a single asset

Syndicate capacity held via a MAPA is treated as a single asset acquired when entering the MAPA – it is not necessary to look through the MAPA and break down the asset into the various syndicate participations that make it up. Where a Name is in more than one MAPA, then each MAPA is a separate asset (FA99/S82 (3)).

If any capacity held by a Name outside a MAPA is transferred into the MAPA it is treated as a disposal of the capacity for CGT purposes. Similarly, if capacity held via the MAPA is transferred out, and held by the Name on a bespoke basis, that will also be treated as a disposal for CGT purposes. In either case, the Name will be treated as having disposed of the capacity for market value (FA99/S82 (7) & (8)).

Acquisition cost of MAPA

The base cost of a Name’s share in a MAPA is the amount paid on joining the MAPA, either in cash or in the market value of syndicate capacity (FA99/S82 (4)). Where the Name joined the MAPA before 6 April 1999, then the base cost is the combined cost of everything in the MAPA on 6 April 1999 (FA99/S82 (11)).

If the Name pays further sums to increase his or her MAPA share, then those further sums are treated as enhancement expenditure (FA99/S82 (4) & (5)).

If a Name contributes additional bespoke capacity to the MAPA, then this is treated as a disposal of bespoke capacity at market value, and as enhancement expenditure on the MAPA share.

If a cash call is made by the MAPA manager, this is also treated as enhancement expenditure.

Date of acquisition

The date of acquisition for CGT purposes is the earliest date on which the Name starts to participate in the MAPA. Since later expenditure is treated as enhancement expenditure, taper relief will not be restricted as a result of the fact that some of the MAPA capacity may have been acquired later than the original expenditure.

This does not apply if at any time the Name disposes of all of the participation and then rejoins the MAPA. Taper relief on any later disposal will start from the date on which the Name rejoined the MAPA.