I have shares in an unquoted trading company that became dormant last year. I invested in the startup of the company in 2014 as one of two Directors building the company, however it subsequently stopped trading completely and no longer develops its product. It has no employees anymore, does not invest in the product, etc.
I intend to submit a negligible value claim (NVC) under s24(2) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992 s 24(2)), which should allow me to realise the loss and offset this against my CGT/Income tax for that year.
I have two questions:
- Do I need to prove that the shares were not of negligible value at the point of the formation of the company? David Harper v CRC  UKFTT 382, appears to suggest that sometime HMRC will argue this case, or is there now a more commonly accepted practice of investing in new startups?
- The company has no revenue or employees, and has a retained loss of c.£20k with no prospect of a dividend for shareholders. However, because it was reasonably capitalised it has a small positive net asset position (about £1k of DLA debtors and £300 of cash). When HMRC asses a NVC, will they look at the potential commercial sale value of the shares (for which there is arguably no buyer without a product or team), or will they look at the positive net asset position and say it is not negligible, because arithematically there is cash in the business?