share losses - negligible value claim

share losses - negligible value claim

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My client has come to me with some old share certificates and wanted to know if the companies still existed. I want to establish share losses because of negligible value on all three companies - all PLC's and traded shares rather than subscribing on issue.

One company is on the IR Neg Value list and the IR have told me I can offset this against other income. I thought you couldn't do this for listed companies?

The other two are in liquidation & administration according to Co House, but not on the IR list. I assume their value is therefore nil.

The total loss is about £3,000, so what could I do? Show the loss on the SA return - client has gains of £4k in 07/08 so this would just waste them. Leave the claim until another year when he makes a gain over his AE? File CG34 with claim to confirm valuation?

I'm out of my comfort zone - so any advice appreciated - thanks!
pixie

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By AnonymousUser
11th Mar 2008 10:29

Not claiming the loss
Pixie - it is not quite as straightforward as delaying a claim until an appropriate year where your client can use the loss.

If the claim is not for the tax year that the share became of negligible value then the share needs to still be in existence and of negligible value at the date on which the shares are claimed to be of negligible value.

If the company is struck from the Register of Companies then that is an actual disposal and therefore no negligible value claims could be made for a date after the actual disposal takes place.

A simple example:-
Ltd goes into liquidation 31 March 2005. negligible value claim for 2004/05. Struck off on 31 March 2008 - actual disposal. neglible value claims could therefore be made for 2005/06 or 2006/07, or an actual loss in 2007/08, but no claims could be made for a negligible value in 2008/09.

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By AnonymousUser
10th Mar 2008 22:45

Thanks Nichola

I have the set of Tottel Core Tax annuals which are great for those on a budget, but I was just thrown by the Revenue's advice as I spoke to them first, then researched it myself and came up with conflicting information!

Also wanted to double check that you can hold back claiming the loss to preserve the AE - but you have now clarified, thank you.

I'll speak to the local office again tomorrow and see what they say - although having seen the programme on ITV tonight "The Tax Man Commeth" , maybe I'll just stick with more professional guidance !!!! ;-)

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By User deleted
10th Mar 2008 21:06

Unlisted
The election to offset against other income is for unlisted shares, so go back to the tax office concerned and query the advice given.

As regards claiming the capital loss, don't claim it until you need it. No point in 07/08 as you will waste the annual exemption.

The section no. you need was s.574 ICTA 1988, but this act has now been over taken by ITA 2007 and I will add the new section no tomorrow (unless anyone else adds it before).

I am confused by HMRC's advice though, so make sure you go back to them.

A good book if you are out of your comfort zone on CGT is Tottel's CGT annual by Andrew Goodall, I get to see lots of books but this one just seems quite user friendly and has some good practical stuff. I assume he will be doing the 2008/07 version.

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