Constellation Healthcare Share Discussion Threads

[rivaldo] 01/3/2017 12:20

I've complained to Barclays about the misallocation between capital and income, and the withholding tax, and they're looking into it. It's Capita's mistake of course rather than Barclays in terms of the allocations/split.

I'm not expecting a quick response!

[parmared off] 23/2/2017 22:01

Sorry my mistake ..... again The proxy statement is slightly misleading (unless I'm just thick) but the payments from my bank didn't add up. To reiterate we should have received $1.19 cash and $1.09 as income payment (30% of $2.17 = 65 cents)($1.74 - 65 cents = $1.09) So yes they are taxing us on the promissory notes even though they have yet to be redeemed.

[parmared off] 23/2/2017 20:53

Please ignore everything I have said - I have been trying to make sense of the figures from what I received as opposed to what the proxy statement promised us. I have now realised that Capita / CHT have underpaid me by 43c! and will be on to them tomorrow. This is even including having had the withholding tax @ 30% taken off.

[parmared off] 23/2/2017 14:34

All taken from the proxy statement : pages 33,34 & for Part 6 pages 59,60

[parmared off] 23/2/2017 14:31

Part 6 :PART 6TAXSECTION A: UNITED KINGDOM TAX CONSEQUENCESThe following paragraphs are intended as a general guide only and are based on current UK legislation and HM Revenue and Customs practice (which is subject to change and possibly with retrospective effect) and are not exhaustive. They summarise advice received by the CHT Directors as to the position of Shareholders who (unless the position of non resident Shareholders is expressly referred to) are resident (and domiciled) in the United Kingdom ("UK") for tax purposes, who are the absolute beneficial owners of their Common Shares and who hold their Common Shares as an investment. The discussion does not address all possible tax consequences relating to an investment in Common Shares. Certain Shareholders, such as dealers in securities, employees and officers, Shareholders that are exempt from taxation, insurance companies and collective investment vehicles, may be taxed differently and are not considered.IF YOU ARE IN ANY DOUBT AS TO YOUR TAX POSITION OR YOU ARE SUBJECT TO TAX IN A JURISDICTION OUTSIDE THE UK, YOU SHOULD CONSULT AN APPROPRIATE PROFESSIONAL ADVISER WITHOUT DELAY.Taxation of Chargeable GainsLiability to UK taxation of chargeable gains will depend on the individual circumstances of Shareholders. Where a Shareholder receives the Acquisition Price, this will take the form of cash and Promissory Notes. The tax treatment of each of these elements of consideration will be different.CashThe receipt of the cash consideration will constitute a part disposal by that Shareholder of his or her Common Shares for the purposes of UK taxation of chargeable gains. Such a disposal may give rise to a liability to UK tax on chargeable gains depending on the Shareholder's circumstances (including the availability of exemptions, reliefs or allowable losses). The gain will be calculated by reference to the part disposal of the Common Shares by that UK Shareholder, the remainder of the Common Share being treated as exchanged for the Promissory Notes as detailed below.In the case of individual Shareholders who suffer a charge to UK capital gains tax, there are two main rates of UK capital gains tax, the applicable rate will be dictated by the individual Shareholders' amount of taxable income. Those individual Shareholders who are higher rate or additional rate taxpayers will pay capital gains tax at 20 per cent. and other individual Shareholders will pay capital gains tax at 10 per cent. Entrepreneurs' relief may be available for the first £10 million of cumulative lifetime gains realised on or after 6 April 2011. Different thresholds apply to gains made before this date. Where entrepreneurs' relief applies, gains which are within the relevant lifetime allowance are taxed at 10 per cent. even if the Shareholder is a higher rate or additional rate taxpayer. Gains made in excess of the lifetime limit are subject to capital gains tax at the prevailing rate, currently 10 per cent. or 20 per cent. as indicated above.For Shareholders who are within the charge to UK corporation tax (but who do not qualify for the substantial shareholdings exemption in respect of their Common Shares) the rate of UK corporation tax is currently 20 per cent. In addition, for such Shareholders indexation allowance on the acquisition cost of the Common Shares should be available until the date of disposal of the Common Shares. Indexation allowance increases the acquisition cost of an asset for tax purposes in line with the rise in the retail prices index and thus reduces the amount of the chargeable gain on disposal of the asset. Indexation allowance cannot be used to create or increase a loss.59A Shareholder who is not UK resident will not be subject to UK tax on a gain arising on the disposal of Common Shares unless either (i) the Shareholder carries on a trade, profession or vocation in the UK through a branch, permanent establishment or agency and, broadly, holds the Common Shares for the purposes of the trade, profession, vocation, branch or agency or (ii) the Shareholder falls within the anti avoidance rules applying to temporary non residents.Shareholders should also refer to the US Tax section Tax Consequences to Non US Holders below for information on any US tax liability that may arise on the disposal of the Common Shares. Non US Holders may have US withholding tax applied to their consideration and should file Tax Forms to have that withholding tax refunded to them where applicable.Promissory NotesThe receipt of the Promissory Notes consideration should not constitute a disposal by that Shareholder of his or her Common Shares for the purposes of UK taxation of chargeable gains. Instead the Promissory Notes are treated as exchanged for the Common Shares and are treated as the same asset as the Common Shares for UK capital gains tax purposes. Therefore the part of the consideration received in the form of Promissory Notes should be "rolled over" and a gain will not crystallise for UK tax purposes until the Promissory Notes are redeemed. When the Promissory Notes are redeemed the gain on the disposal of the Promissory Notes will be calculated by reference to part of that Shareholder's base cost in the Common Shares that has been rolled over into the Promissory Notes. Where a Shareholder (together with persons connected with that Shareholder) holds more than 5 per cent. of the Common Shares this roll over treatment will only apply if HM Revenue and Customs is satisfied that the transaction was for bona fide commercial purposes and does not form part of a scheme or arrangement of which the main purpose or one of the main purposes is the avoidance of tax.Taxation of Interest on Promissory NotesA UK resident Shareholder will be subject to income tax on any interest received in the form of payment in kind interest. Provided that the issuer of the Promissory Note is not UK tax resident and the payment of the interest does not have a UK source there should be no UK withholding tax on the interest.As noted below in the section on US Tax Consequences for Non US Holders there should be no US withholding tax on the interest for UK Shareholders if the correct Tax Forms (W 8BEN) are completed and returned to Capita Asset Services as administrative agent with respect to the Promissory Notes.UK interest received by a UK Shareholder in the form of payment in kind notes should be declared on that Shareholder's self assessment tax return and UK income tax paid on the value of them. There should be no further tax on these promissory Notes when they are redeemed.Stamp Duty and Stamp Duty Reserve Tax ("SDRT")No UK stamp duty or UK SDRT will be payable by a Shareholder as a result of the Acquisition.

[parmared off] 23/2/2017 14:24

16. TaxationYour attention is drawn to Part 6 of this Proxy Statement, which contains a general guide as to the UK and US tax implications for Shareholders as a result of the Acquisition. If you are in any doubt as to your own tax position, or if you are subject to taxation in any jurisdiction other than the UK and US, you should consult an appropriate independent and legal and tax advisor.The ultimate beneficial owner of the relevant Common Shares is asked to complete and validly execute the applicable Tax Forms which may be downloaded from the Company's website at www.constellationhealthgroup.com and return the same to Capita via the registered holder of the relevant Common Shares (if applicable) in accordance with the instructions set out in paragraph 3 under "Action to be taken" above. Failure to complete the applicable Tax Forms could result in a greater amount of US withholding tax being applied to any payment of the Acquisition Price to such Shareholder than otherwise might be the case.33Shareholders will be regarded for US tax purposes as receiving a portion of the Acquisition Price per Common Share ($1.74 of the cash Acquisition Price and the $0.43 in Promissory Notes, totalling $2.17 per Common Share) in redemption of a portion of their Common Shares ("Redemption Consideration") and the remainder of the Acquisition Price ($1.19 per Common Share) as consideration for the sale of the remainder of their Common Shares ("Purchase Consideration"). In the case of any particular ultimate beneficial owner, the Redemption Consideration may be treated as gain from the sale of Common Shares or as a distribution on the Common Shares, potentially taxable as a dividend, depending on whether the ultimate beneficial owner of the Common Shares is considered to have terminated or meaningfully reduced such beneficial owner's equity interest in CHT following the Acquisition, taking into account certain constructive ownership rules that attribute stock to related persons. Because it is not practical for CHT to ascertain whether or the extent to which any particular ultimate beneficial owner of Common Shares may be treated as owning an equity interest in CHT following the Acquisition under the constructive ownership rules, CHT and Capita intend to treat all of the Redemption Consideration payable to Non US Holders as subject to the US withholding tax rules generally applicable to dividends. Under these rules, the Redemption Consideration payable to a Non US Holder generally will be subject to a 30 per cent. withholding tax (amounting to $0.65 per Common Share), subject to reduction under the terms of an applicable income tax treaty (generally to 15 per cent., amounting to $0.33 per Common Share, or zero in the case of certain qualified pension schemes). A Non US Holder that has in fact terminated or meaningfully reduced such owner's equity interest in CHT following the Acquisition and can establish that fact may be able to obtain a credit or refund of the withheld tax by filing a return with the US Internal Revenue Service after the end of the taxable year in which the Acquisition takes place. Shareholders are urged to consult their own tax advisors regarding the application of US withholding tax and the procedure for seeking a credit or refund in their own particular circumstances.

[rivaldo] 23/2/2017 10:26

Parmared Off, thanks for the replies.

Apologies if I'm being slow here. I want to get Barclays on the case with Capita as to the allocations between capital/dividend you've talked about above, but I can't see a single reference in any of the RNS's to part of the consideration being capital and part being income. And the full takeover document download on CHTR's web site isn't working either.

Can you (or anyone) please point me to a specific section of a specific RNS which notes the split of the consideration between the different elements?

[parmared off] 21/2/2017 12:45

Basically they fudged the first payment and have tried to correct things by giving us too much of a dividend payment. Ultimately , providing taxing the prom notes as well is ok, they have given us the correct amount of money but the breakdown between Cash / Income is way off.

[parmared off] 21/2/2017 12:41

hi Rivaldo, I am assuming you have received in total around £1.80 per share with the tax deducted.Capita have mucked up. They made initial capital payments of 76c (so that's your 60p ) when these should have been $1.19 (around 96p) Withholding tax then seems to have been applied to not only the income payment but they have also subtracted the tax due on the promissory notes as well ( seeing that we haven't even received these I'm not sure how they can tax them)Even if applying this additional tax to the notes is correct and above board the "dividend / income payment" should have been $1.74 less withholding tax (in your case 30%) and then subtract 30% of the value of your notes. $1.74 - 30% = $1.218 less $0.129 = $1.089 (88p)

[rivaldo] 21/2/2017 11:57

Been on hols, so just returned to find that Barclays have finally credited me with the proceeds, but in a way which doesn't match the split I expected as per Parmared off's calculation in his post 852.

I've received a Stock Repayment (i.e the capital element) of 60.39p per share (with no tax deducted), and a Dividend of 171.89p per share less 30% withholding tax. In total then, 232.28p per share less the tax, which I'll be getting on to Barclays about for recovery as well as the promissory notes.

Parmared off, do you know why this differs from your split which you kindly laid out (i.e $1.19 capital payment and $1.74 dividend less tax)?

[parmared off] 14/2/2017 13:44

has anyone received their promissory notes yet or been on to their brokers to find out whats going on?

[parmared off] 10/2/2017 10:01

hi scorpione - check your messages

[scorpione] 10/2/2017 09:51

Thanks Parmared, I did all that; complaint is in anyway so if they messed up they will have to reimburse me!

[parmared off] 09/2/2017 19:47

this is assuming that the corporate action teams bothered reading the statement in the first place. as a beneficial holder you are really at their mercy!

[parmared off] 09/2/2017 19:07

Details of the tax deduction arrangement were contained within the proxy statement. The corporate actions team of your broker should have sent you a W8Ben form to fill in (as you are the beneficial holder) and return to them. They in turn ,upon receipt of your form, should have filled out another form (as they are the registered holders) and passed these on to the registrars.

[scorpione] 09/2/2017 17:26

Out of interest, who told you about the tax deduction arrangement.

[parmared off] 09/2/2017 16:45

Unless of course they are planning on paying off the notes within this tax year?

[parmared off] 09/2/2017 16:11

It would appear that they have subtracted the withholding tax due on the promissory notes from the other "dividend payment"How can they subtract tax on something that may never materialise? Flipping wotnots

[rivaldo] 08/2/2017 11:37

Barclays have not sent any proceeds through at all yet. Abysmal.

[100laila] 07/2/2017 21:25

Hi Parmared Off

You are quoting a different split of the $2.93 between capital and income to what has done by Capita and distributed. Have Capita acknowledged they have made a mistake and if so do they plan to correct it? It will messy to correct the withholding tax effect on income portion.

[melody9999] 07/2/2017 20:02

Done the calcs on mine - all recvd from TD Waterhouse.

0.76 tax free at exchange rate around 1.259
2.17 with 15% tax at exchange rate around 1.244

So almost 209p per share with the possibility of claiming the tax back and the more distant promissory notes.

Naturally wish I'd sold at market but at least I have most of the money to re-invest.