Capital Gearing Share Discussion Threads

[sesame03] 03/2/2016 23:02

Hi,

I hold shares in Oxus Gold within an ISA. During December trading was suspended following the conclusion of arbitration in which they were awarded $10m (much less than was claimed). The company intends to appeal the decision however in the meantime administrators have been appointed. Assuming the appeal fails and no money is available to return to shareholders (following payment to legal funders, creditors etc), is it possible I could make a negligible value claim?

I understand that if I request paper share certificates from the broker (Halifax) the shares are automatically withdrawn from the ISA and I am notified of the value on the withdrawal date. Assuming the shares are still listed when I do this the value would be 3.12p (the last closing price).

Also (provided a claim is possible) what event would trigger the negligible value claim? Would I need to wait until the company de-listed or until it was dissolved perhaps? Would a small dividend, say 0.25p invalidate the claim?

Any advice would be greatly appreciated. There is also the hope that the appeal results in an increased payout however it looks doubtful and if I took the shares out of an ISA I understand I would risk a CGT bill.

[ryanwolves] 02/2/2016 23:36

Cheers Gengulphus.As I thought.

[gengulphus] 02/2/2016 23:12

Yes, claiming a loss counts as a claim. So do various other matters, such as negligible value claims: you can pretty safely assume that if HMRC's description of something you could put in your tax return uses the word "claim", it counts as a claim. (And even if that assumption turns out to be wrong in some case that I'm not aware of, you would have a pretty easy defence: you answered the question HMRC asked accurately. Any problem with the answer is due to HMRC not asking their intended question, not to any inaccuracy on your part.)

Gengulphus

[ryanwolves] 01/2/2016 10:53

Thank you david77 and Gengulphus for your prompt and comprehensive reply's.
Most helpful.
Would be grateful if you could take a look at the following question:
i file online.Do i need to answer yes to the question in the CGT section asking whether i wish to make any claims or elections?Not sure if this covers claims for losses or whether it relates to other matters.
Many thanks.

[gengulphus] 01/2/2016 10:07

1)Can CGT losses on shares be offset against income tax?

Not usually. There are some exceptions where they can - e.g. I vaguely recall there are (or maybe were) some among the tax benefits given to EIS (Enterprise Investment Scheme) shares and/or VCTs (Venture Capital Trusts), but I don't remember the details...

So if there is anything 'special' in tax terms about the types of shares involved, it might be worth checking up on the detailed rules. Otherwise, you're pretty safe assuming the answer is "no".

2)Made some gains in the tax year,but these are surpassed by the losses.
Do i offset the gains against my annual CGT allowance first and then reduce my losses by any remaining gain over the annual CGT allowance?

More the latter, but it's a bit of a mixture. Basically, it is:

1) Offset losses realised in the same tax year against the gains. Do that as far as possible. If there are more such losses than gains, the gains can only be reduced to £0 and the remaining losses are carried forward to future tax years.

2) If there are any remaining gains, reduce them by the CGT allowance. Again, they cannot go negative, so if the remaining gains are less than the CGT allowance, reduce them to £0 (and there is nothing you can do with the remaining CGT allowance).

3) If there are still some remaining gains and you have any losses brought forward from previous tax years, use those losses to reduce those remaining gains as far as possible. Again, the gains cannot drop below £0, so either you use up all the brought-forward losses and any remaining gains are taxable, or the remaining gains are reduced to £0 and any remaining brought-forward losses are carried forward again.

(This is often presented in a different order, first offsetting the same-year losses, then offsetting the brought-forward losses but only to the extent (if any) needed to reduce the remaining gains to the CGT allowance, then offsetting the CGT allowance. The two presentations are equivalent - I happen to find the above a bit more memorable.)

Or would it be as follows :
Total gains for year 20,000
Total losses for year (40,000)
Nett loss for year (20,000)

As this is the first time you've realised a net loss for the year, you cannot have any losses brought forward from previous years and so those losses must all be same-year losses (which is implied by your wording anyway). So yes, you offset £20k of the losses against the £20k gains in step 1, leaving £20k of losses to be carried forward into 2016/2017, and steps 2 and 3 don't do anything because there are no remaining gains.

But if for instance you were to realise £25k of gains and £10k of losses in the 2016/2017 tax year, you would then have £25k of gains and £30k of losses available for that tax year, the losses being split as £10k same-year losses, £20k brought-forward losses. In that case, step 1 would reduce the gains to £15k, step 2 would reduce them further to £3.9k (assuming the CGT allowance for 2016/2017 is the same as the £11.1k allowance for 2015/2016), and step 3 would reduce them to £0, leaving £16.1k of the brought-forward losses to be carried forward again into 2017/2018.

3)Had a couple of companies go under this tax year.
How many years after they went bust can i make a negligible value claim on my tax return for the loss?

There's no numerical time limit on making a negligible value claim - but it is limited by the restrictions for making one. Those restrictions include among others:

* You must still own the asset concerned. I.e. you must not have transferred the shares to someone else (not possible on the market, of course, but a private sale or a gift might be possible), and the shares must still actually exist. They cease to exist when the company is dissolved, so at that point you cease to be able to make a negligible value claim - but at the same time you actually realise the loss, and then the normal "4 years after the end of the tax year the loss was realised" deadline applies.

For UK companies that were traded on the main market of the London Stock Exchange, HMRC's negligible value list should tell you whether the company has been dissolved and if so, when - note that it can be many years after the company went bust, as all its affairs need to have been closed out completely before it can be dissolved. But more generally and closer to the "horse's nouth", for all UK companies you can check on whether the company has been dissolved (and if so, when) at Companies House.

* You name a date in the negligible value claim on which you wish the loss to be treated as having been realised. That date must be after the shares became of negligible value, and it must be in the tax year in which you make the claim or one of the preceding two tax years. (For a negligible value claim made in a tax return, it will normally be in the first preceding tax year - e.g. if you make a negligible value claim for a company that went bust in 2015/2016 in your 2015/2016 tax return, which is something you would prepare and submit during the 2016/2017 tax year.)

That basically gives you some flexibility about when you want to bring a negligible value claim into your CGT accounting. That flexibility vanishes when the company is dissolved: at that point, the loss is actually realised (on the date of dissolution) and you can no longer make a negligible value claim - not even one that names a date before it was dissolved.

For something more extensive that I wrote on the subject recently, see .

Gengulphus

[david77] 01/2/2016 08:31

1: No

2: Use either of the free CGT calculators listed at the top of the page to find your net position. Download SA108 from the HMRC website - that should answer most of your questions.

3: Don't know the right answer, but I would claim on my tax return and see what happens - and you are late for the last tax year.

[ryanwolves] 31/1/2016 22:24

Not sure if this thread is still functioning as no posts for some time.
Here goes with a few questions re. CGT losses on shares,
Never had a nett trading loss before,however,looking like i will have a significant loss for the 2015-16 tax year. Unsure on the rules re. claiming the losses:

1)Can CGT losses on shares be offset against income tax?

2)Made some gains in the tax year,but these are surpassed by the losses.
Do i offset the gains against my annual CGT allowance first and then reduce my losses by any remaining gain over the annual CGT allowance?
As an example
Total gains 20,000
Less Annual CGT allowance 11,000
Gain carried forward 9,000
Total losses (40,000)
Nett Loss for Year (31,000)


Or would it be as follows :
Total gains for year 20,000
Total losses for year (40,000)
Nett loss for year (20,000)

3)Had a couple of companies go under this tax year.
How many years after they went bust can i make a negligible value claim on my tax return for the loss?

Would really appreciate any help.

[garrymorrow] 15/9/2015 20:53

Thank you gentlemen for your informed and prompt responses.

[garrymorrow] 15/9/2015 20:51

Yes indeed bones.

Thanks for your help gentlemen.

[garrymorrow] 15/9/2015 20:49

Gengulphus

Excellent response. I will ask the taxman. Your correspondence has crystalized my thoughts and has helped me draft my ideas. My capital loss is embarrassing and well worth recovering.

Many thanks

Garry Morrow

[bones30] 15/9/2015 09:00

I did some research into this a few years ago and it was something to do with it being "chess depositary" or something, was what I was told (mumbo jumbo to me).

Not sure if that helps?

[gengulphus] 14/9/2015 20:43

I've replied in the other CGT thread, in .

Gengulphus

[gengulphus] 14/9/2015 20:41

According to the company website :

"Thor is listed on the Alternative Investment Market (AIM) in London and the Australian Stock Exchange (ASX)."

I'm fairly certain the Australian Stock Exchange has been a 'recognised stock exchange' for a very long time now. Being listed on a 'recognised stock exchange' is enough to make a company ISA-eligible, so I'm uncertain why you think they're not... If it's only because Selftrade told you that they weren't, I think there's a good chance that someone at Selftrade thought "AIM share - not eligible" and didn't enquire further using the correct criterion for ISA eligibility (which back in 2007-8 was simply being listed on a 'recognised stock exchange', so that whether a share was traded on AIM was actually irrelevant to the question apart from the fact that being traded on AIM often meant it wasn't listed anywhere else).

But I'm not certain about that, because searching the company's annual reports for "Australian Stock Exchange" reveals statements like:

"Thor Mining PLC shares are dual listed on the AIM market and the Australian Stock Exchange. On the ASX they are traded as CDI’s."

CDIs are depositary interests rather than shares, which may well have affected their ISA-eligibility back then. I'm afraid though that this is an area of the ISA rules that I don't know or understand.

However, AIM shares became ISA-eligible regardless of whether they are listed on a 'recognised stock exchange' in mid-2013, so from then on I'm fairly certain the THR shares were allowed in the ISA - and in particular, that by the time you sold them in January 2015 they were allowed...

So either the THR shares were actually ISA-eligible all along, in which case the loss is definitely not allowable (though you might have cause for complaint about Selftrade forcing your other holding out of their ISA), or they weren't originally eligible, were incorrectly not chucked out of the ISA, but became eligible while still in the ISA and were later sold. In that case, sorry, I don't know whether the loss is allowable or not. I do know that the question looks like a can of worms to me! - but untangling that can of worms goes beyond my knowledge...

So what can you do about it? Options include (but are not necessarily limited to):

* Settle for the loss not being allowable, chalking up to experience the "make sure the shares you buy in your ISA are ISA-eligible" lesson.

* Contact HMRC to see whether you can get straight answers out of them about (a) whether THR shares were ISA-eligible when you bought them, and (b) if not, what the correct treatment is of a loss made within an ISA when shares are mistakenly bought within the ISA while not ISA-eligible, but they become ISA-eligible before they are sold.

* Pay for professional tax advice about the situation.

Personally, I would probably go for the chalk-it-up-to-experience option unless the amounts involved were enough to pay for professional tax advice several times over.

Gengulphus

[david77] 14/9/2015 19:07

If HMRC insists of these being held in your dealing a/c, then the deals should appear in your list of deals for CGT - in my opinion but I'm not qualified to advise.

[garrymorrow] 14/9/2015 12:58

I had a holding of 323k THR ordinary shares of 0.3p each. I sold all of them in January 2015.

They were bought in an ISA during 2007-08. HMRC did not allow these shares in an Isa and they should have been transferred to my dealing a/c, (as indeed happened to my Selftrade THR shares held with Selftrade). Is my capital loss relevant in my 2014/15 CGT calculations?

I think the answer is that the loss is allowable. Has anyone had this problem and/or can anyone advise.

TIA

Garry

[garrymorrow] 14/9/2015 12:26

I had a holding of 323k THR ordinary shares of 0.3p each. I sold all of them in January 2015.

They were bought in an ISA during 2007-08. HMRC did not allow these shares in an Isa and they should have been transferred to my dealing a/c, (as indeed happened to my Selftrade THR shares held with Selftrade). Is my capital loss relevant in my 2014/15 CGT calculations?

I think the answer is that the loss is allowable. Has anyone had this problem and/or can anyone advise.

TIA

Garry

[gengulphus] 03/8/2015 09:21

Agree, same day trades should be calculated first. Then 30 day trades rule second.

Just to be entirely clear, it's:

First, apply the same-day rules across the board to all dates.

Second, process the remaining transactions in date order (which fully determines their order, as there will be at most one transaction left per day after the same-day rules have been applied).

When processing a disposal in this second stage, you have to match it to an acquisition (and possibly to other acquisitions afterwards, if the first match requires the disposal to be apportioned). The 30-day rule is the highest-priority rule for determining which acquisition it is matched to.

My point is that the "first" and "second" in what you said can potentially cause a bit of confusion by suggesting that they're both about the order in which you process transactions, when in fact that order is determined by the same-day rules (first) and the date-order rule (second). The 30-day rule only affects how you deal with transactions when that order says they come up for processing.

Gengulphus

[sleveen] 02/8/2015 11:12

Thank you, David.


Agree, same day trades should be calculated first. Then 30 day trades rule second.

[david77] 01/8/2015 17:26

I translated the data to that for www.CGTcalculator.com using option 5 on www.stonebanks.co.uk

CGTcalculator says there were 6 sales. I think that we are supposed to combine same day deals - my prog reports 4 sales after combining same day sales. Otherwise, the two progs now give the same results.

[david77] 01/8/2015 13:18

I've put back for option 2.

Same day deals are done first - and then the rest of the deals. The latest mod was to put everythiing in chronological order but clearly doesn't calculate your figures correctly.

[david77] 01/8/2015 11:17

seems to give the right answer

and you finish up with 75000

The latest and you finish up with 35000

I'll try to see where the latest version has gone wrong.

[harrogate] 17/7/2015 12:34

That all makes sense - many thanks for your help

[gengulphus] 17/7/2015 11:11

harrogate,

You're presumably talking about submission on paper (rather than online) using form SA108, the Capital Gains Summary supplementary pages? ( )

First, note that the instructions for those pages ( ) say that you must accompany them with your CGT computations for the year. That's key to answering your questions, I think:

As regards the negligible value claim, what that claim allows you to do is compute a gain or loss (almost certainly a loss) on the holding, as though you had disposed of it for the negligible value, when normally you would only be allowed to compute a gain or loss on the holding when you had actually disposed of it. So you deal with it by:

* making the negligible value claim - this could be done in box 37, but for space reasons I would probably do it on a separate sheet of paper in my computations and write "See negligible value claim included in computations" in box 37;

* including the resulting gain/loss computation in your accompanying computations (probably with some sort of "See accompanying negligible value claim" note against it);

* adding the result of that computation to those of all the other gain/loss computations when preparing the totals to enter into form SA108. I think the direct results of the negligible value claim compared with not making the claim are that box 6 is increased by the resulting loss, box 18 is increased by 1, box 19 is increased by the negligible value (probably zero), and box 22 has "NVC" put into it, or "MUL" if there is also another claim that affects the gains or losses on listed shares (e.g. the EIS claim, which might be deferring a gain on a listed share). That's assuming that the negligible value claim is on a listed share - change the last three box numbers from 18, 19 and 22 to 24, 25 and 28 if it's unlisted - and in either case there may be consequential changes to other boxes: for instance, if you're using losses brought forward from earlier years, the increase in the figure in box 6 will cause you to need to use fewer of those brought-forward losses, affecting the figure in box 7. And I should add that it's your responsibility to make certain every figure is correct - I've tried to identify the main boxes affected for this post, but there's a limit to how much time I'm willing to give to such things and I certainly don't guarantee to have identified everything!

With regard to the EIS claim, I think (but am not certain - I haven't done one for a very long time myself) that an appropriate procedure is again based on the computations: include a computation of the gain to be deferred in the computations, ending it with something like "Less gain deferred by accompanying EIS claim: £N" and the result of subtracting the deferred gain, and use that result in preparing the totals for form SA108. That assumes only one gain is being deferred by the EIS claim: if more than one, then use the EIS claim form to identify how it's split up if it provides boxes for that purpose (as I said, I haven't done one for a very long time and so am not familiar with the forms), or otherwise use a separate sheet of paper in the computations to do so. And again, I would put a brief note along the lines of "See accompanying EIS claim, and EIS deferral in the accompanying computations" in box 37.

Finally, as regards the CGT computations themselves, there's no prescribed form for them. does have a "Computation Working Sheet (for straightforward calculations)" on page CGN 6, but I rather doubt that these computations will really count as straightforward enough! So you'll probably want to provide them in your own format - though the working sheet is still useful as a guide to what sort of information they're looking for in the computations.

Gengulphus