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Sam
Sam, Accountant
Category: Tax
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My query about CGT on “Return Of Value”

Customer Question

My query is about the CGT treatment for the “Return Of Value” (ROV) arising from the recent Vodafone / Verizon deal and the subsequent consolidation of Vodafone shares on 24th February 2014. The basics of the ROV as as follows:- a) A special dividend (opted to be taken as capital) and paid in cash. b) An allocation of 0.026 shares in Verizon for every Vodafone share originally. c) A consolidation of 6 new Vodafone shares for every 11 Vodafone share held originally. I held 4950 Vodafone shares originally and I reckon the CGT calculation of the cash element as follows:- A = Amount of cash returned as special dividend = £1,485 B = Value of Vodafone and Verizon shares after cash = £10,157 C = Original purchase cost of Vodafone shares = £8,970 P = Proportion of Gain = C x A/A+B =1144 Thus, Actual Gain = C minus P = 1485-1144 = £341. First, please advise if the above is accurate? If it is, please advise the procedure to work out the revised book cost of both the new Vodafone and Verizon shares - given that I now hold 2700 new Vodafone shares and 130 Verizon shares? Specifically, is the book cost off the Verizon shares the actual price of them on 24th Feb? Should that be the case, is the total book cost of the VOD shares the same as the original cost?

Submitted: 3 years ago.
Category: Tax
Expert:  Nicola-mod replied 3 years ago.
Hello,

I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Nicola
Customer: replied 3 years ago.

Hi Nicola,


 


Yes, I can wait, no problem.


 


Just to confirm it is a UK tax issue and it did appear that you did have someone with the relevant HMRC experience.


 


Thanks


 


 

Expert:  Nicola-mod replied 3 years ago.
Hello,

We will continue to look for a Professional to assist you.

Thank you for your patience,
Nicola
Customer: replied 3 years ago.

Hello Nicola,


 


I think we have given it a fair try and I think I have found someone locally who will sort it for me.


 


Many thanks for your help and grateful if you could refund my £15.


 


Regards

Customer: replied 3 years ago.

Hi Nicola,


Please advise when the £15 will be returned to my Paypal account.


 


Thanks


J Grant

Expert:  Nicola-mod replied 3 years ago.
Hello,

I am very sorry but I did not receive notification that you had replied. Our records show that the refund was processed on 6th March 2014.

Thank you,
Nicola
Customer: replied 3 years ago.

Hi Nicola,


 


Great, I see the payments there now against the 6th. I guess PayPal had a long weekend.



Many thanks.



J Grant