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Readers’ forum: Treatment of shares in ‘rescued’ company

18 September 2023
Issue: 4905 / Categories: Forum & Feedback , Income Tax
EIS withdrawal

My client invested £100 000 in shares qualifying for enterprise investment scheme (EIS) two years ago. The company did not do well and has now been ‘rescued’ by a takeover. My client has received new shares in exchange for his original holding: they are probably worth about £1 000.

I have two questions. First I know that the £30 000 income tax relief he obtained on the issue must be clawed back but what is the procedure for that? The HMRC manual (VCM15140) says it must be assessed and cannot be included in the self-assessment system but who do I report to in order to make that happen? Second can my client then claim a loss of £99 000 on the takeover or is he required to carry forward a base cost of £100 000 until he disposes of the new holding?

Query 20...

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