Lost investment in Accountancy Business

Lost investment in Accountancy Business

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Fred invested approx £30k into an limited company carrying out accountancy services for its clients. The company has since gone into liquidation so the investment has been lost. Can tax relief be claimed for the loss of this investment?

I have research the EIS, but this siggests that because the business was trading in accountany, tax relief can't be claimed.

Any help would be greatly appreciated.

Thanks

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By cparker87
06th Jul 2011 12:09

Try...

ITA2007 s.131 which provides the capital loss is allowable for relief against other other income where criteria are met.

From memory the investment had to either be EIS qualifying, or simply "unquoted trading company shares". the sections following 131 detail some caveats and are worth a read - they may indicate if accountancy trade is not considered allowable.

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By cparker87
06th Jul 2011 12:12

Just to clarify

My above statement is based upon a capital loss arising under a negligible value claim under TCGA1992. Not to be confused with the initial investing of monies.

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By Liz Elliott1968
06th Jul 2011 12:38

Lost Investment in accountancy business

Silly question but did Fred invest £30k as a loan or share capital?  If is a loan then I think the only relief will be a capital loss.  If its share capital then EIS is unlikely to be given as the company has not gone through the EIS HMRC procedures which have to be done (trust me I know from bitter experience). 

If its share capital Fred may well be entitled to relief under old Section 574 against income tax - sorry cannot remember the new section number for this.

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Teignmouth
By Paul Scholes
06th Jul 2011 22:24

ITA 2007

As mentioned above the claim is under ITA 2007, starting S131 and covers losses on shares whether made by sale or negligible value claims.

I have a client who masters in making capital losses (or rather he believes anything he's told by con artists) and has latched onto this relief for several years and it's become a battle to show that the majority of non EIS shares he's lost money on do not qualify.  

Anyway in the process I have several pages of notes on the relief and you are welcome to them, just send me a PM with  your email address.

 

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