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Posted Mon, 06 Mar 2023 18:06:53 GMT by Gireesh Gaonkar
My wife and I had invested in equity in a UK registered platform Ltd. company a couple of years ago via the HMRC’s EIS scheme. Around 18 months back, we also lent a substantial loan amount to the same firm on an unsecured basis for a said short term of 3 months, and then on for a further period of 5 months on the same terms. The firm has claimed that they are not in a position to payback this loan and have made an offer to convert this to equity - which we do not qant to accept as we cannot afford the capital loss - which has also resulted in our finance position gone into dire straits. So basically I wish to understand 2 scenarios Scenario 1) Not accepting the offer - Classifying this as a Capital Loss 1. Can I offset the capital loss against any type of income at my marginal tax rate?? 2. What do I need to prove to HMRC that this loan in irrecoverable? Scenario 2) Accepting the offer - Converting capital into equity and lets say the company is unable to resurrect and improve its financial position and the equity ( shares) reaches almost negligible value. 1. Can I offset the negligible va;ue share loss against any type of income at my marginal tax rate?? 2. What do I need to prove to HMRC that this loan in irrecoverable?
Posted Thu, 09 Mar 2023 16:17:21 GMT by HMRC Admin 10
Hi
For Sc 1 - guidance in relation to capital gains tax loss in relation to loans can be found at:
HS296 Capital Gains Tax and Debts (2022)
For Sc2 - Guidance in relation to negligible value claims can be found at:
HS286 Negligible value claims and Income Tax losses on disposals of shares you have subscribed for in qualifying trading companies (2022)
Records to keep:
Keeping your pay and tax records
Thankyou.

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