Return of Capital/Share consolidation

[BobbyD]

Hi folks.

Thompson Reuters recently did this:

The return of capital transaction consists of a distribution of US$4.45 in cash per common share (approximately US$2.3 billion in the aggregate) and a consolidation of the company's outstanding common shares (or reverse stock split) at a ratio of 1 pre-consolidated share for 0.9079 post-consolidated shares). The share consolidation is proportional to the cash distribution and the share consolidation ratio was based on the volume weighted average trading price of the shares on the NYSE for the five trading day period which ended today.

Eligible shareholders who duly exercised their right to opt out of the transaction will not receive the cash distribution and will continue to hold the same number of shares that they held prior to the effective time of the transaction.

- https://www.thomsonreuters.com/en/press ... ction.html

Could anybody confirm whether this requires an alteration to my cost of acquisition for CGT purposes?

Thanks.

[PinkDalek]

If you didn't opt out then, yes, it would appear so but I haven't looked in any further depth, other than to note from the link (where there is likely to be further detail on the UK CGT aspects):

The full details of the return of capital transaction are described in the company’s management proxy circular dated October 16, 2018 and related materials, which are available on http://www.thomsonreuters.com in the "Investor relations" section.

[BobbyD]

If you didn't opt out then, yes, it would appear so but I haven't looked in any further depth, other than to note from the link (where there is likely to be further detail on the UK CGT aspects):

The full details of the return of capital transaction are described in the company’s management proxy circular dated October 16, 2018 and related materials, which are available on http://www.thomsonreuters.com in the "Investor relations" section.

Thanks.

I didn't.

Haven't managed to find anything elsewhere so far with regard to UK. What with TR being a Canadian-American company the procedure was setup so as to have no effect on Canadians and little effect on Americans which was described, but as far as I can find without thought or guidance for UK investors.

Will keep digging.

[PinkDalek]

Haven't managed to find anything elsewhere so far with regard to UK. ...

Not the simplest of websites to navigate, is it?

I've now looked here via Search Edgar and can't see the 16 October 2018 return of capital documents but I may be in the wrong place:

https://www.sec.gov/cgi-bin/browse-edga ... e&count=40

What makes you think it isn't a CGT event?

Edited to remove my error above.

[BobbyD]

Haven't managed to find anything elsewhere so far with regard to UK. ...

Not the simplest of websites to navigate, is it?

I've now looked here via Search Edgar and can't see the 16 October 2018 return of capital documents but I may be in the wrong place:

https://www.sec.gov/cgi-bin/browse-edga ... e&count=40

What makes you think it isn't a CGT event?

Edited to remove my error above.

Thanks.

I couldn't find anything either which is why I asked. You'd have thought a company which made money on making information available...

Emailed TR IR earlier and they responded incredibly promptly with a copy of what they say is the October 18 document, which is prominently marked November 2018 on the cover. Replied for confirmation. Either way it's a doc I've seen before and doesn't help a UK investor.

I have no idea whether it is or it isn't a GGT event. I'm more used to getting special divs than explicitly stated 'Return of Capital'. Couldn't find the relevant page on HMRC either, although I'm sure I've read it before.

I'm just trying to make sure I get my sums right as after the event I sold the rump holding I had with the registrar to join the rest of my holding in an ISA. Since the registrar charges 1% + trading fee I saved a couple of quid by staying in for the cash out as it reduced the value of the holding, but I now need to know the acquisition value both to report this sale in next year's SA and to know how much CGT allowance I have left this year.

Thanks again for your help.

[PinkDalek]

I couldn't find anything either which is why I asked. You'd have thought a company which made money on making information available...

Precisely my thoughts yesterday.

Emailed TR IR earlier and they responded incredibly promptly with a copy of what they say ...

Which takes us round in circles. Somewhere or other I think I spotted a contact, other than IR, to get the document needed but, I'm sorry to say, I lost most of my tabs late last night and have only revisited this topic now.

What I did find suggested that most (other than the Canadians) would probably have wished to have opted out (which you didn't do for the reasons you've explained) as I think you've already concluded earlier.

I still think you have a CGT disposal. It would not appear to be a dividend.

Depending on the amounts involved, you either go through the rigmarole of treating the sum as a part disposal or deduct the entirety from your section 104 pool (broadly if less than £3,000 but not reducing your base cost to less than zero). Rather than reinvent the wheel on the latter, Gengulphus recently went into considerable detail on the latter option, 'small capital distribution', as part this topic here on Taxes:

viewtopic.php?p=184898#p184898

[BobbyD]

Thanks.

A partial disposal is no real hassle, involves entering three figures in to my spreadsheet, and then three more figures in the row below for the following complete disposal.

Thanks for the link I'll have a read.

Their timing could have been better, the lead time was quite short as it was guaranteed to go through with the support of the major shareholder, and I was more interested in trying to opt out of a holding in my ISA where I will have suffered a currency charge repurchasing, but the broker never responded.

[BobbyD]

Depending on the amounts involved, you either go through the rigmarole of treating the sum as a part disposal or deduct the entirety from your section 104 pool (broadly if less than £3,000 but not reducing your base cost to less than zero). Rather than reinvent the wheel on the latter, Gengulphus recently went into considerable detail on the latter option, 'small capital distribution', as part this topic here on Taxes:

viewtopic.php?p=184898#p184898

Well it's not a small disposal, it was closer to 10% of share price than 5%.

I think I might be overapplying myself to this. It's a matter of how to apportion cost between two sets of shares both of which were sold within a month. The overall cost of acquisition isn't going to change and neither are the proceeds.

Worst case scenario I should end up at the right answer for the wrong reason. Simply removing the proceeds from the return of capital from the acquisition cost and reducing the share numbers accordingly, entered in my records as a sale, and then treating the final sale as normal should I think get me the right final answer even if the sums which get me there aren't strictly speaking the right ones...