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HMRC have changed their minds about the implications of the decision in Mansworth v Jelley as far as the cost of shares is concerned, which has caused confusion about losses brought forward and the costs to be taken into account in future disposals
My client was granted share options which were exercised in 1998. About three-quarters of these shares were sold soon after exercise partly to pay the income tax at that point. Under Mansworth v Jelley [2003] STC 53 the disposal created a loss which was declared on the tax return and has been carried forward since that date.
Our client is considering the sale of the remainder of his shares. We are aware that HMRC have changed their view on the application of Jelley although our client’s losses have been established on his return and carried forward and can we believe be used against any gain arising.
However how do we calculate the base cost for the remaining holding? Presumably we cannot use the base cost originally calculated under the Jelley principles so the initial base cost will be calculated under the normal rules?
...Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
