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February Questions and Answers

Newsletter issue - February 2015

Q. Two years ago I invested £5,000 in a company under the EIS scheme, but now that company has gone into administration. How do I claim for the loss in value of my EIS investment?

A. As the company has not been struck-off the Companies House register its shares still exist, although they are probably worthless. You can make a negligible value claim for those shares by writing to HMRC, or on your tax return. This will give you a capital loss worth £5,000, which can be set against capital gains made in the same year the claim relates to or in later years. Also, as the shares were issued under the EIS scheme you can turn that loss into an income tax loss by submitting a share loss relief claim. We can help you with that.

Q. I run a small shop, which I inherited from my father. The shop has a flat above it which is let out. I've always reported all the income from the shop and flat together as self-employed income on my tax return. Is that correct?

A. No, the income from your shop and the flat should be reported separately on your tax return. The profit or loss from the shop should be reported on the self-employed pages of your return. The net income from the flat should be reported on the UK property income pages on your tax return. Any loss from the shop can't be set off against profits from the letting, or the other way round.

Q. Back in 2010 I borrowed money from my company, and paid the corporation tax charge due. Business has now improved and my company can now pay a dividend to clear the debt I owe to the company. How can I reclaim the corporation tax charged?

A.

You need to complete a form L2P to reclaim that tax charge, but that must be done online here: www.gov.uk/government/publications/corporation-tax-reclaim-tax-paid-by-close-companies-on-loans-to-participators-l2p

You need to answer all the questions on the interactive form, then print it off and sign it. The signed form should be sent to:

HMRC
Corporation Tax Services
PO Box 29997
Glasgow, G70 5AB