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 in certain circumstances, which are set out in FA99/S82. A Name who receives any amount from the MAPA, either in cash or as syndicate capacity, will be treated as having made a disposal (FA99/S82 (6)).

There are a number of different events that can lead to the member receiving cash or capacity 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 the market value of the capacity at the time of transfer. This market value will also be the acquisition cost to be used for CGT purposes in the event of a later disposal. This provision applies whether sums are actually paid to the member, or paid into any fund controlled by the member.

The Name will also be treated as having made a disposal under TCGA92/S24 (2) if all of the capacity held via the MAPA has become worthless. This only applies if all of the syndicate capacity has become worthless, and not, for example, if capacity in just one of the syndicates 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 MAPA manager, or when a member leaves a MAPA. It follows that disposals of syndicate capacity by the MAPA manager are not chargeable events for CGT purposes, provided that no cash is paid to the Names on the MAPA.

Similarly, a Name incurs expenditure for CGT purposes when either cash or capacity is transferred 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 of CGT.

Mergers of MAPAs

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