If you have acquired assets that have become worthless, it may be possible to make a negligible value claim, which you can use to realise a loss, which can be set against chargeable gains to reduce your capital gains tax liability. A negligible value claim can be made either on the your tax return or in writing to HMRC.
Where the claim is for company shares and securities and the company is in liquidation, the following information must be given to HMRC:
- a statement of affairs for the company and any subsidiaries;
- a letter from the liquidator or receiver showing whether any return will be made to the shareholders;
- details of how this decision was reached (for example, a balance sheets where liabilities are significantly greater than assets); and
- evidence that no recovery or rescue is likely (for example, a statement that the company has ceased trading).
If a negligible value claim is being made for a company that is not in liquidation or receivership, it is necessary to provide comprehensive evidence to support claim that the shares are of negligible value.
HMRC publish a list of quoted shares and securities that they accept as being of negligible value.
Written by the Tax Advice Network