International Ferro Metals Share Discussion Threads

[rhcm] 07/5/2018 18:49

The following may be of help to those who hold shares:
Thanks to Gengulphus on the CGT board

rhcm,

How to claim this as a loss?
I am in the process of moving broker and I have one company IFL which is currently suspended and the company have said shares are unlikely to be of any worth to shareholders. The new broker will not accept the transfer and the current broker cannot obtain a paper certificate. They have advised that the shares could be gifted to a charity via sharegift but how can i claim the capital loss?
Many thanks for your help.

First, do NOT try to use your broker as your tax adviser, unless you have a specific agreement with them that they will act as such. The terms and conditions for an execution-only broker account specifically exclude them giving you financial advice of any type, which includes tax advice (that's basically why it's called 'execution-only'), and even other, more expensive types of broker account such as advisory or discretionary accounts might well have limitations on the types of financial advice the broker will supply.

The reason I emphasise that so much is that giving the shares to a charity is one of the most certain ways to ensure that you cannot claim the capital loss! As the ShareGift website says (with my bold), "donating shares charitably gives rise to neither a gain nor a loss for Capital Gains Tax (CGT) purposes". I.e. giving the shares to ShareGift is of no value to you, nor to the charity (assuming that they really are worthless - it certainly sounds as though they are!). The broker is IMHO being rather irresponsible by even suggesting the course of action as a possibility - it is one, and they're not giving any financial advice by merely saying it's something they can do, but clients who aren't fully aware of what 'execution-only' means could easily read it as implying that donating the shares to ShareGift is a good idea... It generally isn't when you've made a loss on a share, especially a total loss!

The answer about what you need to do to claim the loss is: make a negligible value claim. Not "wait for HMRC to declare the shares to be of negligible value, then make a negligible value claim", just make one once you're reasonably certain
that they are indeed worthless (*). Usually, the point when you become reasonably certain of that for a company is when you get a statement that there is no realistic prospect of any return to shareholders from someone in a position to state that authoritatively - e.g. the administrator of a company in administration. I would generally be happy to base a negligible value claim on such a statement - indeed, I believe the reason such statements are made to shareholders is (besides informing them of the bad news about their investment) that it enables them to support a negligible value claim.

Why shouldn't you wait for HMRC to declare the shares to be of negligible value? Quite simply, the reason is that HMRC generally (a) only decide whether shares are of negligible value when they're asked to make a decision by a taxpayer making a negligible value claim; (b) even when they have made such a decision, generally don't make a public declaration of the decision. They do make such a declaration in some cases, by adding it to a 'Negligible Value agreements' list But that list is limited to (in its own words) "shares formerly quoted on the London Stock Exchange", and "quoted" is a somewhat-slippery term with regard to tax... It certainly doesn't have the obvious 'everyday' meaning that "the London Stock Exchange quotes prices for it", as shares traded on AIM are clearly "quoted" in the 'everyday' sense but I have never seen a collapsed company on AIM make it on to the list...

Just what the exact requirements are to get on to the list, I haven't managed to work out, but in general, I would take the presence of a share on the list to mean "yes, HMRC will accept a negligible value claim for this share, provided the claim's dates fit the entry", but its absence to merely mean "you'll need other support for a negligible value claim about the share you're interested in". Note incidentally that presence on the list is not a substitute for a negligible value claim - you need to make one to establish the loss whether or not the share is on the list, it's just that if it is on the list and your claim fits the dates, you have the assurance that HMRC will accept the claim.

One other thing I'll mention is that you can accompany a negligible value claim with a "post transaction valuation check" request - see and the form it links to (the latter contains most of the information). That's another way to get assurance about whether HMRC will accept the claim - and especially around this time of year, you can send in the negligible value claim and "post transaction valuation check" request and leave HMRC plenty of time to tell you their answer before you have to submit the tax return.

(*) And that you actually want the loss. You're not obliged to make a negligible value claim for any specific date - it's just got to be a date:

* When the shares are of negligible value (and have become so since you acquired them).

* That is in the tax year that you make the claim or one of the previous two tax years. (The previous tax year is probably the most common case - e.g. a claim submitted with a tax return now is for the 2017/2018 tax year that that tax return is about, but made in the 2018/2019 tax year.)

* You still own the shares, and you must still own them on the likely-to-be-later date that you actually make the claim. (Basically, once you no longer own the shares, you have actually disposed of them for CGT purposes and so have actually realised the loss. Negligible value claims are there to allow people to deal with assets that have become worthless but they have difficulty actually disposing of, and so the rules don't allow you to waste the taxman's time with them once you have actually disposed of an asset.)

It may be that claiming the loss now is not something you want to do - e.g. it might be that dates in the 2016/2017 tax year are before you can establish that the company is of negligible value (note I haven't researched IFL more than very superficially for this post!), that your net gains in the 2017/2018 tax year are below the CGT allowance and so the loss would simply end up being wasted offsetting gains that weren't going to attract any CGT anyway, and that it's too early in the 2018/2019 tax year to be certain whether the loss would end up saving CGT or not. In that case, it's perfectly OK for you to defer making the negligible value claim until a time when you can get some CGT savings from the loss - though note that if you keep deferring making it in that way, eventually you will probably find that you have actually disposed of the shares and so actually have realised the loss, on a date not of your choosing. (The common case for that is that a company in administration or liquidation eventually gets dissolved, i.e. ceases to exist. Its shares cease to exist at the same time, and an asset ceasing to exist counts as actually disposing of it for CGT purposes. I don't know exactly what is happening to IFL, though, and given its international aspects, very possibly wouldn't understand exactly what the CGT treatment would be even if I did know...)

[stockriser] 12/1/2017 08:53

Aye, I rang Barclays and asked what's happening with IFL, they just replied...

It
Fuking
Lost

....lol

[qackers] 12/1/2017 08:50

Cash it quick and run for the hills. lol

Thanks for reminding me of this disaster.

[stockriser] 12/1/2017 08:41

My small holding of 34k shares is showing on my marketmaster a/c at ...... WTF?

[will1067] 08/10/2016 19:46

When will this fiasco be over ???
Chris what is your new title at Samancor.

[gark] 03/10/2016 16:42

Why have they not delisted this?

[stockriser] 16/9/2016 10:18

"IFM has now completed the ZAR300m sale of its local subsidiary to Samancor. The remaining transactions, for which conditions are in the process of being fulfilled, will see ZAR140m raised for the IFMSA mining rights and beneficiation plants as well as for Sky Chrome. In addition the IFM’s sale of Sky Chrome’s equity will go through for ZAR100. We expect that the IFM plant will be brought back into operation by 4Q16. (total nameplate capacity 267,000 tonnes)"

[rishika2] 26/8/2016 10:39

when will they delist the shares or declare them worthless?

[gark] 23/8/2016 22:55

Over and out!

[rishika2] 18/7/2016 10:36

That announcement was for IFMSA: there will be no distribution to IFL shareholders as part of IFMSA sale.

That they did not say that shares are worthless although they definitely are.
Also they need to publish their accounts. You may be surprised that they are still paying wages and still have employees. I wonder how their salaries are being paid ?

[sledin] 16/7/2016 10:17

I'm fairly sure you don't have to wait any longer to claim losses here. The company has already stated in May that the shares are worthless:
"it is now clear that there will be no distribution to shareholders at the conclusion of this process"

As a result, I'm almost certain you can proceed to make a negligible value claim:

[rishika2] 15/7/2016 12:20

yes cgt loss was another topic..it is not possible to claim unless the shares are officially declared worthless..i I have emailed to the company and will share their reply..

[konil] 15/7/2016 11:40

ok, thanks gark.

[gark] 15/7/2016 11:24

I don't think you can claim the loss until the shares are withdrawn. I am waiting.

[konil] 15/7/2016 11:07

sorry rishika, i don't know, mine are held with pooled nominees with no admin charges.

a further issue is when to claim the cgt loss - i have not yet because as far as i know we do not yet have confirmation of zero return to shareholders.

has any one already claimed cgt loss for ifl in their 2016 return? did hmrc accept?

[rishika2] 15/7/2016 10:07

can somebody please advice? IFL shares are suspended but company not yet declared to be in administration.

Having to pay to the broker fees to maintain the shares when it seems like that they may have no value ? What are fellow shareholders doing ?

[rishika2] 25/5/2016 17:10

Chris gone now. Should have been fired long back.

[konil] 20/5/2016 07:55

i guess they have sold (actually given away!) all the assets and are just going through the formalities, waiting to delist. though i dont understand the game at this stage i cannot see anything rising phoenix-like from the ashes - if it does i'll be very happy to be wrong.

[rishika2] 19/5/2016 22:44

I am wondering as to what may be happening. If the shares are worthless why is the company not being put into administration

[konil] 19/5/2016 17:31

fair point rishika.

in any case if one assumes the loss was created in the 2016/2017 tax year then it doesn't need to be registered with hmrc until the 2017/2018 return i guess.

[rishika2] 19/5/2016 17:03

shares remain suspended. Will they have any value when resumed ? The company has not gone into administration

[konil] 19/5/2016 16:27

i guess that will help in lodging the (total) loss with hmrc!

[gark] 19/5/2016 16:22

Over and out!

[david77] 09/5/2016 17:41

Mine are in an ISA :-(