CGT with liquidation

[Blagdon]

Unfortunately I owned some Candover Investment shares. These were subject to a Members Voluntary Liquidation around May 2018 and I received £1.13 per share as the initial (and bulk of) liquidation payment. However there is some hope of a small further final payment at some time in the future.

How do I account for 2018/19 CGT?

[PinkDalek]

Unfortunately I owned some Candover Investment shares. These were subject to a Members Voluntary Liquidation around May 2018 and I received £1.13 per share as the initial (and bulk of) liquidation payment. However there is some hope of a small further final payment at some time in the future.

How do I account for 2018/19 CGT?

Candover Investments PLC https://beta.companieshouse.gov.uk/comp ... ng-history?

I'm surprised there's been nothing relevant filed since the Declaration of Solvency Notice itself dated 22 April 2018. There'll probably be an update fairly soon which should give an idea as to what you might expect to receive in the future (perhaps you already have something direct or via your brokers).

Edit: I've found an announcement online (not sure this works http://www.candoverinvestments.com/?fil ... y-2018.pdf) which includes:

Candover Investments plc (In Members’ Voluntary Liquidation) (the Company)

On 19 April 2018, in accordance with the circular to shareholders dated 3 April, the Company was placed into members’ voluntary liquidation and Derek Hyslop and Patrick Brazzill, both of Ernst & Young LLP, 1 More London Place, London SE1 2AF, were appointed joint liquidators. The Joint Liquidators are pleased to confirm that a first interim cash distribution to the Company’s Ordinary Shareholders of £1.13 per Ordinary Share will be made on 3 May 2018.

Shareholders will be aware from the circular dated 3 April 2018 that any subsequent distributions are expected to be made at the Joint Liquidators’ discretion. At present, the Joint Liquidators are not in a position to confirm the timing and quantum of any subsequent distributions but Shareholders will be advised by the Joint Liquidators in due course.

Any queries in relation to the Company should be addressed to the joint liquidators’ staff at Ernst & Young LLP ...

As for your CGT computation, it is a disposal and see https://www.gov.uk/hmrc-internal-manual ... al/cg12731 where you may have to estimate B = the value of the part retained at the time of the part-disposal.

What I don't know is if liquidation distributions can fall under the alternative small cash amount treatment as described briefly here:

https://www.gov.uk/guidance/capital-gai ... s-and-cash

Was your distribution less than £3,000 and did the amount received exceed your CGT base cost?

[PinkDalek]

What I don't know is if liquidation distributions can fall under the alternative small cash amount treatment as described briefly here:

https://www.gov.uk/guidance/capital-gai ... s-and-cash

Was your distribution less than £3,000 and did the amount received exceed your CGT base cost?

Poor wording/memory on my part.

https://www.gov.uk/hmrc-internal-manual ... al/cg57800

A capital distribution is any distribution from a company which is not treated as income for income tax purposes. Most distributions, for example, dividend payments, will be income distributions. The capital distributions you are most likely to see in practice are distributions in the course of a winding-up. ...

Then see https://www.gov.uk/hmrc-internal-manual ... al/cg57835 onwards which covers the £3,000, if relevant to you.

[Blagdon]

As for your CGT computation, it is a disposal and see https://www.gov.uk/hmrc-internal-manual ... al/cg12731 where you may have to estimate B = the value of the part retained at the time of the part-disposal.

Thanks that is helpful.

Any suggestions on how to estimate B.

[PinkDalek]

As for your CGT computation, it is a disposal and see https://www.gov.uk/hmrc-internal-manual ... al/cg12731 where you may have to estimate B = the value of the part retained at the time of the part-disposal.

Thanks that is helpful.

Any suggestions on how to estimate B.

No, other than asking the Joint Liquidators what might be the anticipated final distribution(s) per share and the expected timescale.

I think this HMRC Statement of Practice from 1978 still applies:

Policy paper
Statement of Practice D3
Published 31 March 1978
https://www.gov.uk/government/publicati ... ractice-d3

It includes (my bold):

2. Where the shares of a company are unquoted at the date of the first or later interim distribution, therefore, the HMRC Commissioners are prepared to authorise inspectors to accept any valuation by the taxpayer or his agent of the residual value of the shares at the date of the distribution, if the valuation appears reasonable and if the liquidation is expected to be completed within 2 years of the first distribution (and does not in fact extend much beyond that period). ... then read on.

Some might include B as near to or £nil (disclosing what you have done on your Tax Return) or at least wait until later in the year to see if you hear anything further from the liquidators, subject to the applicable filing deadlines.

You didn't answer my £3,000 question, so I assume your proceeds are over that amount. Are you anticipating there is CGT to pay, come what may, or what? Is your CGT annual exempt amount fully used up for 2018-19? Do you anticipate using the full CGT annual exempt amounts in future years?

Edit: Are you actually looking to claim a Capital Loss? You do not have to report losses straight away - you can claim up to 4 years after the end of the tax year that you disposed of the asset. from https://www.gov.uk/capital-gains-tax/losses by which time you should know the situation. Might depend on your other chargeable gains in the year, if any, as to whether or not you are prepared to wait that long.

Answers to these and other related (but unasked) questions might well sway what I would do in such a situation.

I'd also keep an eye out here https://beta.companieshouse.gov.uk/comp ... ng-history

[Blagdon]

Many thanks for your help again - the point about reasonable estimate is helpful.

Yes over £3,000 proceeds in each of mine and my wife's names individually.

I am hoping to claim losses to carry forwards. In one name I have no other gains/losses. In the other name I have another significant loss and a very small gain. So I think I have the ability to carry forward enough losses to potentially be helpful in future years.

When I have spoken to the liquidator in the past, I got a polite push off on both timing and quantum.

Immediately before the liquidation NAV was £1.24 per share and the initial liquidation pay out was £1.13 -- the £0.11 per share left over is approx. £2.4m

So all I need is a reasonable estimate of the liquidator's fees -- I could ask them though I doubt they will give a real answer.