Negligible Value Claim

Negligible Value Claim

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Hi,

Would be great to have some perspective on an NVC for an unlisted company investment I made.

In 2012 I made a non-EIS investment in a Danish incorporated internet start up, with HQ based in UK. The company had been trading around 5 years prior to this.

The start-up has not gone to plan, recently needed significant new investment at a very low valuation with considerable dilution for all shareholders. The amended shareholders agreement reflecting the new shareholdings for investors/founders needs to be signed by all to go through - still TBD.

In the event the company liquidates, would this investment qualify for a NVC?

In the event my shareholding goes to a very small fraction of it's original subscribed price (token value) but company still trading, would this qualify for NVC?

If I sold the shares to an existing shareholder at a token value - literally worth next to nothing because of the current and planned dilution, but would allow me to crystalise the loss - would this qualify for NVC?

Many thanks

Nick

Replies (2)

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By johngroganjga
01st Apr 2014 08:23

In the case of liquidation or a sale of your shares the question of an NV claim does not arise as you will have made an actual loss.  NV clams are about where there has been no actual crystallised loss but HMRC nevertheless accept that a CGT loss may be claimed in any event.

So in the second scenario you describe it is open to you to make an NV claim.  Whether it will be successful depends on the facts.

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Replying to lionofludesch:
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By nick1098
03rd Apr 2014 09:26

Many thanks John

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