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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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In 2013/14 tax year, the company I worked

Customer Question


In 2013/14 tax year, the company I worked up and I earned approximately £115k plus £25k based on future performance. It's being paid annual portions (though the lion's share is in the first 2 years). Most of this is liable with entrepreneur's relief
In 2010 I made a £25k investment in a start up firm, which might still come good but I think is going to be wound up in the next 10 months. I will suffer the full loss. Can I withhold some of the gains I made in 2013/14 against potential future losses?
Thanks
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
.

Was the 2010 investment made through the Enterprise Investment Scheme?
Customer: replied 1 year ago.

Yes it was

Expert:  TonyTax replied 1 year ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 1 year ago.

again.

When you backdate losses such as capital losses, the tax relief is calculated based on the situation earlier year. However, the relief is usually given as an adjustment to the tax liability tax year in which you report the loss in your tax return.

However, if you consider that the shares are of negligible value now, you can make a claim to that effect by writing to HMRC and, if you are wishing to take the risk that they may not accept that the shares are of negligible value, the result of which would be that you leave yourself open interest charges and surcharges on tax paid late, by making an adjustment to your 2013/14 tax liability in box 15 on page TC2 of the SA110 Tax Calculation Summary here.

Take a look at the notes here and here information on the rules around claiming negligible value status and aspects specific to EIS shares.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.

I don't think the would accept they are of negligible value now - but the firm will run out of cash by August and I doubt they will manage to raise any further capital.

My question was more around whether I can somehow offset gains this year against losses in future years. Either by withholding some of the gains against that investment of backdating the loss, say, next year.

Thanks

Expert:  TonyTax replied 1 year ago.
You cannot carry forward capital gains against losses you may make in the future. However, you can defer a CGT liability by investing in EIS shares with the gain being revived later on. See the EIS helpsheet I gave you a link to in my previous post.

If you make a loss on the EIS shares, you can use it against gains or use it against income in the same year or the previous year as you can read here.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15753
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and 2 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

OK - thanks

Bill

Expert:  TonyTax replied 1 year ago.
Thanks and good luck.

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