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Share pooling with multiple portfolios

How do people treat multiple portfolios when calculating capital gains?

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Hi 

Apologies if this has been discussed before - I couldn't find an answer when I searched. 

I'm reviewing the tax return for an individual who became deemed dom on 6 April 2017.  He has multiple bank accounts (as a result of previous income segregation exercises) and has invested funds with a handful of different banks, some of whom have further split investments between different porfolios. 

Some of the banks provide UK CGT reporting. Some don't and we're calculating the gains manually.  I've noticed that he occassionally holds the same funds in different portfolios. My concern is that all the units must be pooled for tax purposes. So if Bank 1 sells some units, the deductible costs will be a percentage of his entire holding across all the holdings. Bank 1 will only know the informnation on the units it has purchased so its CGT calculations will not be correct, as will all future CGT calculations by Bank 1 and all the other banks.  

So my questions are: (1) do others agree that the units must be treated as a single s104 pool, despite being in separate banks/porfolios/nominees etc?; (2) if so, how do people deal with this in practice?  Is it a case of keeping CGT calculations across the combined porfolios and calculating manually, or do practitioners rely on the CGT reports provided on the basis that it will/should all "come out in the wash" eventually?; (3) has anyone had any experience of HMRC's view/practice on this? 

Many thanks for any thoughts. 

 

 

 

Replies (12)

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By Accountant A
19th Jan 2020 14:28

My view is that the holdings do need to be pooled. If the banks are offering information as "CGT calculations" then, as you note, they are wrong.

No idea what people to in practice, I'm afraid.

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By Wanderer
19th Jan 2020 19:08

(1) Yes.
(2) Yes, No.
(3) Not relevant, it's the law.

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By penelope pitstop
20th Jan 2020 02:23

True cost of doing a proper CGT job in these circumstances, £5,000.

What you will get away with charging client, maybe £200 to £500.

And therein lies the problem. Some jobs are not humanly possible within budgets. HMRC would not even care a jot. I hate these problems. Knocks years off your life.

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By ireallyshouldknowthisbut
20th Jan 2020 11:19

We all seem to agree with right answer is to do it properly.

The practical answer is to do some analysis to see how much difference it would really make and then decide how much of a fig you give about it. The rate of CGT is pretty low now, so you would need some big numbers and big difference in the share pools to make much of a difference, albeit the 7 day rule could come in and bite you unawares. It might be quicker to do is properly than think about it....!

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Hallerud at Easter
By DJKL
20th Jan 2020 11:45

There is software that can be bought and then it is just a matter of each year inputting all purchases/sales/corporate events.

Whilst have not had the multiple portfolios issue I used to do CGT for a portfolio with a fair few annual transactions-up to 200, and after a few years playing with excel I bought software, posted in all purchase/sale transactions, checked out and adjusted for corporate events and let the software do most of the hard work. Once familiar posting 100-200 transactions a year takes no more time than posting the same number of transactions into accounts software.

I suspect this is the route I would take, one off cost setting up what already held and thereafter just a matter of posting the transactions for each year from each portfolio as they arise.

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Replying to DJKL:
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By DuncanM
22nd Jan 2020 11:37

Agree with the above. There is software than can calculate this for you and then output the data directly into a tax return, depending on what software you might be using for this element. Some can also be used to subscribe for corporate event reporting and post these automatically too.

I have come across this many times over the years, and software can be used to reconcile the transactions across individual portfolios to make sure it has been entered corretly, but also consolidate across them all such that the gain is correctly reported onto the tax return.

It is particularly valuable when working on a trust as a single entity for tax but with multiple portfolios for different beneficiaires, as it can also be used to work out how much each portfolio may need to compensate another for the fact that the assets are pooled for tax purposes.

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By North East Accountant
22nd Jan 2020 10:50

Just done one for a client with the same situation, except he had two nominee accounts with earlier purchases still on share certificates. Also, reinvested dividends each quarter and purchased more shares across all 3 accounts. 2018/19 first sales for 12 years.

Total nightmare, doesn't do it justice but you have no choice other than to grind through the numbers.

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By tristan
22nd Jan 2020 12:51

Thanks to everyone who has replied. I had hoped that people would point me to some relaxation from HMRC, but it seems that's not the case and the comps will need to be done long hand across all the portfolios.

Thanks for taking the time to share your views.

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By pauljohnston
22nd Jan 2020 14:26

Please can posters advise of the software that they have used

Thank you

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By DuncanM
22nd Jan 2020 17:28

I have previously used CCH products.

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Replying to pauljohnston:
Hallerud at Easter
By DJKL
22nd Jan 2020 18:21

I sadly cannot remember, I dug out some printouts from 2005/2006 but they do not say the product name on the printouts- I do recall it was pretty cheap and actually worked but that does not really help you.

Will have a rake through my filing cabinet drawer of dead software discs (why do I never throw these things out) to see is any clues/ can find a disk amongst the old PAYEMaster ones and the ghosts of Sage50.

Edit- found disks/software key docs- it was PTP CGT Share Pooling which I used up to 2006/2007, no idea if still produced

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By pauljohnston
30th Jan 2020 11:50

DJKL Thank you - and now you mention it I too used this software but I dont know if it still Exists

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