.png)
.png)
HMRC have published Revenue & Customs Brief 41/10 explaining a change in practice on relief against income for capital losses made on shares subscribed for in qualifying trading companies under ITA 2007, s 131 to s 151.
This change applies where individuals subscribe for a joint holding of shares, or subscribe for shares through a nominee.
If an individual subscribes for shares where enterprise investment scheme (EIS) income tax relief is attributable to those shares, or they are shares in a qualifying trading company, and makes a loss on the disposal of those shares, he can claim to set off that loss against income rather than capital gains.
Section 250 permits income tax relief where the subscription was made by a nominee on behalf of the individual, or where the subscription was made on behalf of joint owners.
Where EIS income tax relief was not attributable to the shares there is no equivalent legislation to extend relief to subscriptions by nominees or joint owners.
Previously, HMRC took the view that share loss relief for such subscriptions was available only where an individual personally subscribed for shares as a sole subscriber; relief was not considered to be available for subscriptions made in joint names, e.g. a married couple, or by a nominee.
The department has reconsidered its practice and will now accept claims to relief for losses on the disposal of qualifying shares where the subscription is made in joint names or through a nominee.
The proportion of the capital loss to be attributed to each joint owner needs to be determined as a question of fact, typically based on each owner’s contribution to the cost of the shares.
Claims for share loss relief must be made within one year from the normal self-assessment filing date for the year in which the loss occurs.
This means that claims can still be made for share loss relief in respect of joint subscriptions or subscriptions through nominees for 2008/09 and later years.
In addition where there is an open enquiry into an existing claim to share loss relief for any tax year, including years before 2008/09, that claim can be settled in accordance with this change of practice.
HMRC will update the guidance in their Venture Capital Manual at VCM45000 et seq to reflect the new practice.
