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cgt allowable loss?

cgt allowable loss on inherited shares?

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client inherited 2 shareholdings in A Ltd and B Ltd from father. Both qualified for BPR.

Shares in A Limited sold 5 years later at £100k profit but shares in B Limited were effectively disposed of at £100k loss i.e. the probate value as the company was dissolved with no distribution.

Is there any problem with setting that £100k loss against the £100k gain provided the probate values are sound?

 

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02nd Jul 2019 11:25

What kind of problem do you envisage?

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02nd Jul 2019 11:26

Subject to the usual loss relief rules, sounds good to me.

Why the doubt ? Always a useful question when someone comes up with a question which seems to have an obvious answer ......

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02nd Jul 2019 11:58

How are you calculating your profit and loss? Are you deducting probate value (before BPR) from sale proceeds? Or are you doing something stupid that you're not telling us about, because I expect that is where the doubt is creeping in.

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By 356B
02nd Jul 2019 12:20

"Were effectively disposed of" suggests a nil value claim. Are you within the time limits?

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to 356B
03rd Jul 2019 21:10

Negligible value claim time limits are complex.

So long as the company exists, a negligible value claim falls into the year the claim is made.
see https://www.gov.uk/government/publications/negligible-value-claims-and-i...

If however the company shares are no longer owned[ie if the company is dissolved] the loss is made in the year of dissolution, with the usual time limits .

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to Montrose
04th Jul 2019 10:29

thanks for this Montrose - for some reason the alert only just hit my inbox date of actual dissolution fell in 19/20

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02nd Jul 2019 12:24

sorry for delay - the reason why I asked is that 4 years ago I had a case where an individual told us that she had sold shares inherited from husband at probate value.

However it transpired that the probate value actually turned out to have been far less than the sale proceeds she achieved.

In this case I think the executors had actually paid for formal professional valuations of both shareholdings.

I suppose my concern was that if no IHT has been paid the valuations are not set in stone.

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02nd Jul 2019 12:52

yes thanks 356B - we are well within time limits - the shares became negligible value in 18/19 but company actually formally dissolved in 19/20

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02nd Jul 2019 15:35

I think you are right about the value. No tax -> no implicit agreement -> not ascertained (IHTM09242).

Neg value claims can't be made after dissolution.

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to Tax Dragon
02nd Jul 2019 15:48

thanks Dragon - my colleague was sure this was the case

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