For completeness, it is only a capital disposal by virtue of the de minimis £15k now provided for. Were it not for that, the process might have been a little more complicated. (Even then, I believe that due process has to be followed for a de minimis purchase.)
I'm not following this - are you saying its not a capital loss (share loss relief) of £45k but rather its limited to £15k?
Even if the disposal rolls into next year, they can claim relief this year (s132(1)).
Thanks - I wasn't entirely clear and was aware of that but you are right a couple of shareholders want to make a claim for the previous year (i.e. 2019/20) hence why I wanted to know if the disposal is the date of distribution (i.e. assume its made before 6 April 2021)?
It's a repayment of the original share capital, so the shareholders are making a capital disposal with a £45,000 loss. The £25,000 rule does not come into it, as that only applies if there are distributable reserves.
Thank you - that makes sense. The shareholders will to claim for share loss relief for the £45,000 before the 20/21 tax year end. The distribution/repayment of capital (i.e. £5,000) is going to hapen before 6 April 2021 but the date of dissolution by Companies House will take it into the next year.
I presume it goes by the date of distribution (this tax year) and so they can claim share loss relief in this tax year?
Sorry to bump this thread but I have a similar situation for a client. The company has £2k cash + £3k investment (which it would like to distribute/transfer to the underlying shareholder). The company ceased trading on 28/2/21 but has started the process of distribution of the assets which will likely be resolved / minuted by the directors / shareholders on 31/03/21.
The underlying shareholders have incurred a capital loss as the original investment is far more than the likely distribution of above. As a result, they wish to claim share capital loss relief on their shares.
As a result, is the 31/3/21 the effective date (therefore share capital loss relief can be claimed in 2020/21) or will it be the ultimate striking off date by Companies House after DS01 filed (so share capital loss relief will be claimed in 2021/22)?
Yes but probably the crucial element which I thought I had included in my original post which I didn't (so apologies) is that the shareholder passed away about 6 months ago and is non UK resident and we have no means of finding out their representative.
My answers
I'm not following this - are you saying its not a capital loss (share loss relief) of £45k but rather its limited to £15k?
Thanks - I wasn't entirely clear and was aware of that but you are right a couple of shareholders want to make a claim for the previous year (i.e. 2019/20) hence why I wanted to know if the disposal is the date of distribution (i.e. assume its made before 6 April 2021)?
Thank you - that makes sense. The shareholders will to claim for share loss relief for the £45,000 before the 20/21 tax year end. The distribution/repayment of capital (i.e. £5,000) is going to hapen before 6 April 2021 but the date of dissolution by Companies House will take it into the next year.
I presume it goes by the date of distribution (this tax year) and so they can claim share loss relief in this tax year?
Sorry to bump this thread but I have a similar situation for a client. The company has £2k cash + £3k investment (which it would like to distribute/transfer to the underlying shareholder). The company ceased trading on 28/2/21 but has started the process of distribution of the assets which will likely be resolved / minuted by the directors / shareholders on 31/03/21.
The underlying shareholders have incurred a capital loss as the original investment is far more than the likely distribution of above. As a result, they wish to claim share capital loss relief on their shares.
As a result, is the 31/3/21 the effective date (therefore share capital loss relief can be claimed in 2020/21) or will it be the ultimate striking off date by Companies House after DS01 filed (so share capital loss relief will be claimed in 2021/22)?
Yes but probably the crucial element which I thought I had included in my original post which I didn't (so apologies) is that the shareholder passed away about 6 months ago and is non UK resident and we have no means of finding out their representative.
3 lawyers that I have contacted don't know the best way forward. it seems to have perplexed people.
3 lawyers that I have contacted don't know the best way forward. it seems to have perplexed people.
Thanks.
Any other ideas ?
We are talking about £20k worth of shares
ok will have to look into the tax side.
what would be the debit journal entry - would it go through the P&L as "Dividends Paid"?