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Negligible value claim

I have a client who has liquidated his company and in order to do so he has had to fund the liquidators costs himself (rather than the company). My question relates to making a negligible value claim.

The liquidators have indicated to my client that he will be able to offset his costs against his income tax and I am presuming they mean by way of a negligible value claim.

I believe that my client will be able to make a claim for the loss on the subscriber shares eg 100 ordinary shares @ £1 = £100 loss, but I am just wondering where the liquidators are coming from by saying he can offset his costs?

As he has footed the bill for the liquidation, could he include the liquidator’s costs in his capital loss calculation as incidental costs of disposal and therefore generate a much larger negligible loss claim? Or is it treated as though the director has loaned capital to the company in order for it to pay the liquidator’s costs and he has not then been able to recover the debt? Or is it neither? Any help or past experiences gratefully received.

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30th May 2012 13:23

negligible value claim & liquidation costs.

The two claims are totally seperate:

 

A "Negligible value claim" is a claim for shares disposed of  at a pecuniary value.

On the whole the share would be quoted shares.

In the case of unquoted shares where there never was much "arms length"/trading value which could be used to value the unquoted shares then the negligible claim would only affect the director/shareholder's capital gains tax position.

alot of "advisers" flog the idea of claiming capital loss relief against current year taxed income for cpaital losses arising from a negligible value claim.-which is wh its easy to be confused and think a negliible value claim is a claim against income- it is not.

Depending on the circumstances the liquidors costs may be able top be claimed as one off "post cessation expenses" on youur income tax return if as director shareholder your company was wholly owned by you.

 

Otherwise you would only be able to claim your share of the expenses in accordance with your %age shareholding..........

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04th Jun 2012 21:47

Thanks for the info.

Can you point me in the direction of where I will find further information about claiming liquidator costs as a post cessation expense gainst income tax?

I have had a scan through the BIM80500 pages but don't see any reference to directors claiming for these types of costs.

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03rd Aug 2012 13:21

Just bringing this thread

Just bringing this thread back to life!

Can anyone point me to guidance surrounding offsetting liquidator costs against a director's income tax?

david5541 wrote:

"Depending on the circumstances the liquidators costs may be able to be claimed as one off "post cessation expenses" on your income tax return if as director shareholder your company was wholly owned by you"

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