Capital Gearing Share Discussion Threads

[miata] 15/7/2012 09:30

Pay up and soldier on with the review.

Lessons:
1) deal by letter not by phone
2) HMRC are aggressive in enforcing "automatic" penalties even when no tax is due.

[churchill2] 15/7/2012 08:27

I would be grateful for some advice.

Due to an unwelcome compulsory cash takeover the shares that the wife and I jointly owned made a substantial CGT in year 2010/11.

In the middle of January of this year I completed my self assessment return and paid the tax.

Unfortunately my wife has not worked for thirty years and was not on the system.

Phoned HM for advice and was told categorically that it would take a couple of weeks for that to happen. I asked what would happen if we went past the cut off date the 31st I was assured this would not be a problem.

However this took months rather than weeks and as soon as the wife was on the system we paid the amount due.

Some time afterwards we received a penalty charge. Again phoned HM to be assured again it was a HM mistake and would be removed within three weeks and that would be the end of the matter.

Futher demands arrived with interest charges on top of the penalty charge.

Phoned HM again and a lovely lady was full of sympathy and advised us to appeal as she thought our treatment was harsh.

That appeal has been turned down on the grounds that by law we should have informed them during the year. No mention of their involvement. We can request a review of the decision but advises us to pay up with a chance this might be paid back if the reviewing person finds in our favour.

So we are in between a rock and a hard place. Do we soldier on or pay up.

Advice gratefully received.

[miata] 06/7/2012 17:32

The small profits rate of corporation tax (20%) applies. You obviously don't benefit from an annual CGT exempt allowance, use of losses against personal gains, use of EIS, use of ISA or use of SIPP (preferred route).

Been there, considered it and decided there was little benefit and several disadvantages.

[gemballa2] 06/7/2012 17:25

Hi

sorry for my complete ignorance on this subject but maybe someone in similar circumstances on here who can assist or has gone down this road.

I have a ltd company of my own which is a primarily an IT contracting company and I am the sole director/employee.

I also invest in stocks - usually through a personal trading account. I am wondering whether I would be better off investing using a company trading account and therefore be able to invest in stocks with income earned by my company before paying myself a salary/dividends and then investing it in the personal account. The latter option is obviously subject to tax first before I can invest anything.

What rates would apply to capital gains on the company account compared to the personal account. Also how complex is the accounting. My current no-frills accountant wont do stock trading?

Thanks in advance

[david77] 06/7/2012 11:05

£15k. I showed my net loss in box 36 - any other info

You should wait to get confirmation from an expert.

[joe say] 06/7/2012 10:49

can anyone help with the 2011/12 CGT return - Form SA108 2012

In box 19 for listed shares and securities it asks for gains in the year before losses - does this mean if I made £15k on profitable trades and £5k loss on bad choices that I enter £15k or do I net to £10k (being the £15k gain less £5k losses) ?

[daytraders] 27/6/2012 11:10

Gengulphus, thankyou as always, yes i thought i would not really have to fill in the bit about carrying losses forward, but like you said i dont think it has done any harm if i had just added the figure in anyway, and thx for confirmation about not having to report my isa/sipp trades, i just needed confirmation, cheers

[jimbo55] 27/6/2012 11:00

Gengulphus, thanks very much for your rapid and full response in post 371 to my post 370. Very much appreciated. I am on the 'tax return amendment' case. It is fair to say that clogged losses do not apply to me.....

[gengulphus] 27/6/2012 10:52

daytraders,

I only made a few trades the last tax year, and they were either in my isa or sipp, so am i right in thinking i did not have to fill in the cgt part of my self assesment online, ...

Correct - all trades within tax shelters are completely 'invisible' to CGT: no tax can be due on them and they should not be reported.

... well i did have to fill in the bit that asks me to carry my losses forward from previous year thou to keep them, cheers

I don't think you even had to do that. The rules saying when you have to fill in the CGT pages don't say that you do. In particular, while you have to claim losses to make them usable in the first place, and wanting to claim something is one of the reasons for filling the CGT pages in, carrying losses forward is just administration and not something that needs to be claimed. Also, those rules are tightly enough defined that if they don't say you have to fill in the CGT pages, it's guaranteed that any CGT losses you bring forward into the year will be carried forward out of it again, without either being added to or subtracted from - so if e.g. you carry £10k of losses forward out of 2010/11, then have nothing to report about CGT in 2011/12, your losses brought forward into 2012/2013 will be £10k. Or more briefly, your losses brought forward into a tax year are simply the losses carried forward the last time you actually had to report on CGT.

Having said that, I don't think it will do any harm to have filled in the CGT pages just to say that the losses brought forward into the tax year are being carried forward out of it again, unchanged. I.e. I'm not saying you've made a mistake - just that I think it's unnecessary, so that people in your situation who haven't done it don't think they've made a mistake...

Gengulphus

[daytraders] 27/6/2012 10:21

I only made a few trades the last tax year, and they were either in my isa or sipp, so am i right in thinking i did not have to fill in the cgt part of my self assesment online, well i did have to fill in the bit that asks me to carry my losses forward from previous year thou to keep them, cheers

[gengulphus] 27/6/2012 09:51

Jimbo55,

I'm afraid neither of your theories about using losses / carrying them forward is correct!

The rules are:

* Each tax year, you must use the losses realised in that tax year against gains realised in that tax year as far as possible - i.e. if necessary, right down to having no gains left. This is the relevant rule in your situation: with gains of £7,738 and losses of £802 realised in the 2010/11 tax year, you had to use the losses against the gains, reducing them to £6,936. This won't have saved you any CGT, since both £7,738 and £6,936 are below the CGT allowance and so have no CGT to pay on them. So the £802 of losses was effectively wasted, which is unfortunate - but them's the rules...

* So the only way you ever get to start carrying losses forward or increase the losses you're carrying forward is if you realise more losses in a tax year than you realise gains; if that happens, you carry the difference forward (in addition to other losses you were already carrying forward, if you had any). For example, if you had instead realised £802 of gains and £7,738 of losses in the 2010/11 tax year, you would have had to use £802 of the losses against the gains, but then with no gains left, the remaining £6,936 of losses would have started being carried forward.

* The remaining rule is about when you use brought-forward losses. That rule is that if, after using same-year losses, your gains are still above the CGT allowance, you use brought-forward losses until either the remaining gains have been brought down to the CGT allowance or you have no brought-forward losses left. E.g. if the example in the last bullet point had happened, and in the following 2011/12 tax year, you realised £15,000 of gains and £3,000 of losses, you would first offset those losses against the gains, leaving £12,000 gains. Since your gains are still £1,400 above the CGT allowance of £10,600 for that tax year, you would then have used £1,400 of the £6,936 losses brought forward from 2010/11 to reduce the gains to £10,600. The remaining £5,536 of those losses would continue to be carried forward into 2012/13.

Both the rule about using same-year losses and the rule about using brought-forward losses don't give you any choice about using the losses, so your return saying that you realised £7,738 of gains and £802 of losses in the tax year and were carrying the losses forward almost certainly is indeed in error, needing amending. ("Almost certainly" rather than "certainly" because there are some special-case rules that say that a loss cannot be used against particular gains - for example, the "clogged loss" rule about losses realised on disposals to your "connected persons". Those rules can override the normal rules about when losses are used - it's just that you cannot choose to override them yourself.)

Gengulphus

[jimbo55] 26/6/2012 22:04

Hello there,

I have a question to ask about a Capital Gains tax return I submitted last year. It was only the second I'd ever done, and I'd made a nice profit. However, I think I mistreated my losses by carrying them forward when I shouldn't have. I'll explain here.

My gains in that year came to £7,738.00, before losses. I made a loss of £802. I assumed I could carry forward the loss of £802 into a future tax year. However, based on what I've read since I submitted the return, I now believe this can only be applied if your gross gains exceed £10,100 (or whatever the GCT Allowance is), and you have losses remaining after using the cumulative loss to net your gains down to £10,100 (or you've only made a loss in the tax year).

Have I understood this correctly (and made a mistake in a tax return for which I'll now need to submit an amendment)?

Thanks in advance for any help offered.

Jimbo

[theuniversal] 23/6/2012 18:51

thanks daytraders for a quick response to what i was meaning to say/get at. and sorry Gengulphus for not explaning my self the first time and for your detailed response. both were helpful.

another question for you guys do you know what the level of savings is before you declare it to the jobseekers as i understand it you are alowed so much until you cant claim jobseekers.

[trade_geek] 21/6/2012 10:55

thanks for the detailed response - much appreciated.

[gengulphus] 20/6/2012 17:25

No, there is no particular required format. The Notes for the Capital Gains Summary supplementary pages ( ) contain a worksheet, but it's rather simple and (at one disposal per page) likely to be voluminous if you've got dozens of share disposals - and the notes say themselves that it isn't adequate for some cases involving shares... I would simply use it as a guide to what information is wanted for simple cases, find a more compact form in which to present that information, and find a way of dealing with complications such as rights issues, takeovers for shares, share splits, etc.

Various people have reported submitting the calculator outputs without any objections from HMRC. That doesn't prove they are acceptable to HMRC - only that either they are acceptable to HMRC or HMRC don't happen to have chosen to examine one of those tax returns in detail yet. But the second possibility is probably getting a bit unlikely, so I think they are acceptable - but I'm not certain.

Note that the calculators do not automatically deal with the complications mentioned above - instead, when such complications occur, you have to tailor their inputs to get the correct results (make certain you include notes to say what you did!), or just fall back on manual calculations. But even if you do the latter, the calculators should be able to deal with the bulk of the work.

Gengulphus

[trade_geek] 20/6/2012 15:03

guys when submitting tax return for shares is there a particular format that the calculations need to be in considering many of us would have made dozens of trades? are cgtcalculator com workings sufficient/ recognised by hmrc?

[pvb] 20/6/2012 09:49

Unbelievable! Another stock I'm recently being 'looking at' with a view to buying - so it too has now shot up.

There must be a way for me to make money_ out of this. Tell you what, anyone want to pay me a fee? Just let me know a share you own that you want me to 'look at' (promise I won't buy!) and we'll both be quids in.

Then again - calling all shorters. For a fee I'll actually buy a share you want to short... :-(

[sleveen] 17/6/2012 16:36

OK thanks david, I'll look at my figures and try again.

[david77] 17/6/2012 08:28

Sleveen - I have now run both mine and my wife's CGT figs thru CGTcalculator.com and the figs from that are within a £ of those from my prog.

I make a comment on the webpage for some mods - but don't bother if they are only minor.
// 31 Jan 12 - tax28 poolqty combined with sharesheld
// Jan 12 - tax27 several mods to get thru JSLint and html4/strict tests
// 7 mar 11 - modified start and end date feature
// 25 aug 10 - added start and end dates for CGT calcs

JSLint and html4/strict check pages for errors and I have done some minor cosmetic changes to get thru those tests, but nothing that should change the calculations.

[david77] 16/6/2012 18:10

Sleveen - the current version of my CGT calculator should work ok, but I must admit, I didn't check the figures for my return on CGTcalulator.com this year.

Unfortunately, I am out tonight and tomorrow, so it will be Monday before I get a chance to run my figs on the CGTcalc. I will tell you whether they compare ok by lunchtime on Monday.

[sleveen] 16/6/2012 14:56

Hi David, the following may seem a strange question:

I originnally completed my 2011-12 CGT calculations using your 25/5/2010 version. The figures derived are similar to the current CGT calculator. Howewer, I have also used the latest version (28/4/12) of your calculator and this produces a vastly different figure to both your 25/5/2010 version and the CGT calculator.

Has there been a major review for the 28/04/12 version and could something have gone wrong? No critisism intended.

[brancho] 12/6/2012 10:04

This may be of interest - see also post 6581.

Having submitted my own CGT comps (losses) for 08/09, 09/10 within the 4 year time limit (Feb 2012) in order to register them, and having submitted the original returns for those years soon after the 5 April of those years, I got a letter back saying I was too late to amend the returns for those years. I was not amending the returns, merely putting a claim in for the CGT losses for those years - I did not submit a CGT comp for those years in my original returns.

A phone call to the tax office (technical call centre in Manchester) advised me that the fact I had written a letter submitting the CGT losses for those years and that I was registering those losses would be sufficient evidence/proof in furture years when I come to utilise those losses.