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How do I calculate purchase cost?

How to do CGT computation without purchase information?

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The client is a widow with shares currently valued at £225,000. These have been held for a long time (decades) and some will have been inherited from her husband. Before I became involved, she de-cluttered by throwing out a mass of paperwork, which unfortunately seems to have included some or all of the paperwork showing acquisition costs etc. She now wants to get rid of the shares, because they are "too much trouble".

She seems to be between a rock and a hard place, because any acquisition cost figure used would have to be estimated, and if that fact is declared on the tax return HMRC would I assume want to know when the final figures were available.

I would appreciate suggestions as to the best way forward.

 

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By Rammstein1
30th Aug 2019 09:44

If any were held before 1982, use the March 1982 valuations.

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By b.clarke
31st Aug 2019 09:41

I was going to do that. But shareholdings change over time; there are company name changes, scrip issues, rights issues (which might or might not have been taken up). 1982 was 37 years ago...

Some of the shares were inherited from the client's mother in 1978 - I do at least have a list of them, but although I have the declared value of shares on the husband's death in 2012, I don't have a list breaking that down.

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RLI
By lionofludesch
30th Aug 2019 09:48

The inherited shares will be at probate value.

When did her husband die ?

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By Matrix
30th Aug 2019 13:17

She must have the share certificates if she is looking to sell so call up the registrar and ask when she bought them and then look up the historic market prices.

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By b.clarke
31st Aug 2019 09:40

The shares have all been in an online account since 2014 - no share certificates anywhere to be found.

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By lionofludesch
31st Aug 2019 10:07

All I can say is good luck.

Maybe her best plan is to hold them until death.

Or sell them in tranches not exceeding the CGT annual exemption.

Not what she wanted but she should have taken advice before the de-cluttering.

The most difficult aspect of CGT is gathering the information. The computation itself is generally a doddle.

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By b.clarke
31st Aug 2019 14:16

"Or sell them in tranches not exceeding the CGT annual exemption."

That would take 20 years, and sprightly though she is, she might easily not last 20 years.

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Replying to b.clarke:
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By lionofludesch
31st Aug 2019 14:38

No problem.

That would leave the death option.

It is, after all, a problem of her own making.

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RLI
By lionofludesch
31st Aug 2019 15:58

I certainly think you need to make her aware of the difficulties she has caused by chucking out all her records.

She can then decide whether to pay you a huge fee for reconstructing all the information and, even then, not having any certainty that the figures will be accepted, or whether to hang on to the shares.

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