CGT Query

[XFool]

If a company is liquidated, when is the relevant date of the loss for CGT purposes?

e.g. Listed company moves to AIM (often a bad sign), starts failing, shares suspended from AIM

in Oct 2010. Unlisted shares issued. Company appears to be dormant. Eventually:

FINAL GAZETTE NOTICE

Strike off date of Company: 05/10/20
Dissolution date of the Company: 13/10/20

So, for CGT purposes, would the loss be in 2010 or 2020?

Similarly, another failing company put into administration April 2013, AIM listing cancelled in May 2013. Businesses sold off. Letter received from KPMG Restructuring in May 2018: "Notice of progress report and notice of final account prior to dissolution"

Again, for CGT purposes, what is the date of loss to a shareholder?

TIA

[mc2fool]

See here? https://www.gov.uk/guidance/negligible-value-agreements

Can you let us know what you invest in .... so the rest of us can avoid them!

[Lootman]

One thing you can do to get around any uncertainty about this is to arrange a private sale of the position. A price can be agreed that reflects the worthlessness of the holding, say a peppercorn value of one pound. And then the loss can be taken in the tax year of that transaction.

You can still sell an unlisted or private holding. You just can't use an exchange or a broker to do it.

[XFool]

See here? https://www.gov.uk/guidance/negligible-value-agreements

Yes, I know of that. The trouble is, neither company is or ever was listed there.

In fact, I have never understood that list - it goes back to the 1960s! - there must be some 'special' reason that I have never understood to get on that list. Companies do go bust, they do go to zero, without ever appearing there.

Oh wait:

A list is not published for:

unquoted companies
companies formerly quoted on the Alternative Investment Market and PLUS Market

So...?

[XFool]

To keep it simple: Would this FINAL GAZETTE NOTICE date be, in every case, considered the effective date of the shareholder loss by HMRC?

[scrumpyjack]

To keep it simple: Would this FINAL GAZETTE NOTICE date be, in every case, considered the effective date of the shareholder loss by HMRC?

or give them to your children at nil value. That is a CGT disposal event.

[XFool]

...I'm not understanding this. How can I give away something valueless, that no longer exists?

No wonder I hate having to deal with CGT.

[mc2fool]

As no one here appears to know you could try digging through https://community.hmrc.gov.uk/customerforums/cgt, and if you don't find an answer sign up and post your query there. Don't expect a fast response.

I do wonder why you're asking now, given that these are all for tax years prior to the last ... but in any case, you'd much prefer it wasn't the 2010 or 2013 dates, as those are outside of the four year window to declare capital losses.

P.S. Or you could look in: https://www.gov.uk/hmrc-internal-manual ... ins-manual

[XFool]

As no one here appears to know you could try digging through https://community.hmrc.gov.uk/customerforums/cgt, and if you don't find an answer sign up and post your query there. Don't expect a fast response.

Thanks, mcfool.

I do wonder why you're asking now, given that these are all for tax years prior to the last ...

Because:

1. I hate having anything to do with CGT, so I never bother reporting losses etc.
2. Unfortunately I have reportable capital gains now. i.e. in last tax year.

[Lootman]

...I'm not understanding this. How can I give away something valueless, that no longer exists?

It does still exist. It just isn't worth anything, isn't listed on an exchange and cannot be publicly traded. But you can still sell it privately or give it away. Either way that crystallises a loss in the tax year that it happens.

Philosophically speaking, if X is worthless than X must exist, else it could not have attributes.

[XFool]

...I think you are missing the point. If a company is wound up/liquidated it definitely doesn't exist anymore. Unless HMRC expects reporting of ghost companies.

[SteelCamel]

It sounds like you're talking about different situations.

To keep it simple: Would this FINAL GAZETTE NOTICE date be, in every case, considered the effective date of the shareholder loss by HMRC?

No, not in every case. That's the default if you do nothing.

You can choose, in some cases, to realize the loss any time before the company is dissolved, either by getting rid of the shares or by making a negligible value claim. Once the company is dissolved you no longer have any choice, you have realized a loss on the date of dissolution.