How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask bigduckontax Your Own Question

bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3596
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

UK corp tax - my company purchased shares in a malaysian

Resolved Question:

UK corp tax - my company purchased shares in a malaysian private company 5 years ago as part of an export business plan. There has been some trading in that period but the strategy is failing. The sector is oil and gas and the company is loosing money and seeking to raise additional capital. The rights issue values the company at substantially less than the investment made so the share asset value in my company balance sheet is impaired. The impairment affects this years P&L so the question is;
1. Is the share value impairment tax deductible ?
2. If it exceeds this years profit can it be carried forward and if so for how many years ?
Submitted: 7 months ago.
Category: Tax
Expert:  bigduckontax replied 7 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

As companies are not subject to the Capital Gains Tax (CGT) regime then any trading in shares is conducted through the trading account. Thus such transactions will be so reflected in the Profit and Loss Account and in the event of a loss in the relevant year then that loss can be carried forward indefinitely.

I do hope that my reply has been of assistance.

Customer: replied 7 months ago.
Kieth,I think you miss understood elements of my question.The trading I was referring to was in services - that arose as part of the cooperative business plan in which the equity stake was a part. So there was an initial share purchase from retained earnings and the shares then obviously when to the balance sheet as an asset at purchase value. They have not then been traded. Since then there has been rights issue that clearly demonstrates that balance sheet asset value is impaired - so the shares are not to be re-sold but are to be revalued. The question is whether the implied loss from the re-valuation or provision is tax deductible or can only be claimed when the shares are eventually sold (i.e traded).
Expert:  bigduckontax replied 7 months ago.

As I told you CGT does not apply to companies. Thus if an implied loss is passed through the P&L account there is no reason why it should not be set against Corporation Tax.

Customer: replied 7 months ago.
OK - great and the implied loss of value set by the new share issue (rights issue) - would be a reasonable way to document the value of a share of a private company not normally traded.
Expert:  bigduckontax replied 7 months ago.

In the circumstances set out I am of that opinion. I suggest that this is unlike;ly to be challenged by HMRC.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3596
Experience: FCCA FCMA CGMA ACIS
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 7 months ago.

Thank you for your support.

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
< Previous | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C.
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex
 
 
 

Meet The Experts:

 
 
 
  • Sam

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
< Previous | Next >
  • http://ww2.justanswer.com/uploads/TA/Tax Expert/2013-8-21_231010_sam.64x64.jpg Sam's Avatar

    Sam

    Accountant

    Satisfied Customers:

    7088
    26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
  • http://ww2.justanswer.com/uploads/BI/bigduckontax/2013-8-12_222058_1.64x64.jpg bigduckontax's Avatar

    bigduckontax

    Accountant

    Satisfied Customers:

    2333
    FCCA FCMA CGMA ACIS
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg TaxRobin's Avatar

    TaxRobin

    Tax Consultant

    Satisfied Customers:

    524
    International tax
  • /img/opt/shirt.png taxadvisor.uk's Avatar

    taxadvisor.uk

    Chartered Certified Accountant

    Satisfied Customers:

    2845
    FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
  • http://ww2.justanswer.com/uploads/MS/MsAM/2012-6-9_16426_anna.64x64.jpeg Anna's Avatar

    Anna

    Teacher, writer, biologist

    Satisfied Customers:

    270
    Great research skills, variety of work experiences, teaching experience.
  • http://ww2.justanswer.com/uploads/PD/pdheslin/2012-6-6_232056_pambig.64x64.jpg pdheslin's Avatar

    pdheslin

    Consultant

    Satisfied Customers:

    51
    20+ years of internet site creation and search engine optimization. Dozens of search tools at my disposal.
 
 
 

Related Tax Questions