Q&A February #2

Q. I made an investment into a promising start up company several years ago. Because of the pandemic, the company has struggled over the last 12 months, and has just gone into administration. What is the best way to secure relief as soon as possible?

A. As the shares are likely to be without any value, you can look at the possibility of making a negligible value claim. If the conditions are met, you’re treated as having disposed of an asset even though you remain the owner. The advantage being that it should secure a loss that can be offset against your general income (assuming the company is an unquoted trading company meeting the requirements), and you can carry this back to the previous tax year. 

For example, if you make the claim in March 2021, you will be able to amend your 2019/20 return to include the loss claim. The government’s guidance on negligible value claims and income losses offers some helpful information.

About the Author

Martin Johnson

Partner

With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.  Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues. A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.  

To get in touch please e-mail martin.johnson@torgersens.com.