Insolvency, tax and shares.

Feb 17, 2005 5 Replies
F

I invested a modest amount in a company a few years ago. Initially in 1999 and again in 2002. Whilst I have paperwork confirming the purchase of these shares I do not have the shares in my possession.



I believe I can claim relief on the negligible value of shares following the company's demise a year ago.



What is this relief given on? Is it at basic rate or based on the tax rate during the year when the company folded or the year in which the investment was made?



What proof do I need that I paid money for shares?



I would appreciate any help.


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D

Quoted or Unquoted shares?

Subscribed or bought?

The relief is given in the year of claim, although it can be retrospective for a maximum of 2 years from the beginning of the tax year in which the claim is made, providing that the shares were owned at that time and were of negligible value at that time also.

Proof of purchase is not required, unless asked for by the IR.

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F

Many thanks for your reply.

Share capital.

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D

If you subscribed for the shares in an unquoted company, then you have the choice of utilising the loss either for CGT or Income Tax - the latter is often the more useful.

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F

The trouble I have is that in the tax year the company went down, my income was only just above the personal allowance. Hence being uncertain, if set against income tax, which year or years they will offset this against the income tax I've paid.

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D

There is a choice of 2 years.

Have you read the IR's Help Sheet IR286? It should be on their website.

It may be that CGT is the better option for you?

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