Negligible Value Claims

Negligible Value Claims

Didn't find your answer?

I have a client who believes that a negligible value claim can be used “as and when” required if the company in question has not been dissolved. However I think all claims for negligible value follow the same procedure whether the company is dissolved or not and claimed in the year Inland Revenue agreement is reached.

Any thoughts?

Thanks in advance

JoJo

Replies (2)

Please login or register to join the discussion.

avatar
By User deleted
23rd Jan 2007 15:59

Individual's claim
The 'negligible value claim' of s.24 TCGA 1992 is a claim that an individual (or company) is entitled to make, if it wishes, if a chargeable asset has become of negligible value.

The list published by HMRC is a helpful aid to taxpayers as to when HMRC have agreed that a company is of negliglble value.

Given appropriate information (and the willingness to argue a case if required) you could make a claim referring to a time earlier than the HMRC published one.

If you don't make a claim at any point the asset is disposed of for CGT when asset is actually sold (e.g. the liquidation is complete).

e.g. company goes in to administration Jan 2005. HMRC list on negligible value list May2005 (perhaps they feel that the situation wasn't final until a few months into the administration.)

Here, a negligible value claim would not be contested by HMRC giving the date as any time after May 2005 but there's nothing stopping you claiming Jan 2005 (giving appropriate disclosure as to why - Veltema etc.)

Alternatively wait until the liquidation is completed and you have a disposal whether you like it or not.

Thanks (0)
avatar
By barryhallam
23rd Jan 2007 16:05

I would agree........
.....with your client.

Provided you can justify that the shares have become of negligible value a claim can be made at any time provided the shares are still held.

There is provision to backdate a claim by up to two years if the shares were also worthless at that ealier date. Once the company is dissolved the shares no longer exist and a disposal has occurred and you cannot then make a negligible vallue claim.

Revenue agreement is not a deciding factor - they do not even publish their agreement to most negligible value claims (only some quoted shares)

Thanks (0)