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HMRC internal manual

Venture Capital Schemes Manual

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HM Revenue & Customs
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Share Loss Relief: individual and corporate claimants: corporate claimants: points of difference from individual claimants

Identification of shares from a mixed holding

VCM75450+ gives guidance on identifying the shares disposed of out of a mixed holding where the claimant is an individual. The rules which apply where the claimant is a company are very similar, but the exceptional cases in which the alternative rules apply are slightly different.

For individual claimants the general rules are at VCM75450 and the special cases are described at VCM75460: the special cases are (in summary) where the mixed holding contains either Business Expansion Scheme shares, Enterprise Investment Scheme shares, or shares to which Deferral Relief under TCGA92/SCH5B is attributable, or Seed Enterprise Investment Scheme shares. For company claimants, the special cases are those where the mixed holding includes shares to which investment relief is attributable under the Corporate Venturing Scheme (FA2000/SCH15) and which have been held continuously from the time they were issued until their disposal. (The meaning of ‘held continuously’ is given at FA2000/SCH15/PARA97.)

The share identification rules which apply to these special cases is given at FA2000/SCH15/PARA93, construed as though the disposal it refers to is the disposal which gives rise to the allowable loss for Share Loss Relief purposes.

Limit on income tax reliefs

With effect for losses arising in 2013-14 onwards, claims to Share Loss Relief by individuals are subject to the overall limit on income tax reliefs. Guidance on this is at VCM74035.

The limit on income tax reliefs does not apply to company claims.

Deemed disposals

The loss, destruction, dissipation or extinction of an asset is not obviously a ‘disposal’ of that asset, but TCGA92/S24(1) ensures that it is treated as a disposal for the purposes of that Act. A deemed disposal of this sort is one of the four types of disposal on which Share Loss Relief may be due to individuals under ITA07/S131(3) and to companies under CTA10/S68(2) (see VCM74110). But this has not always been the case. Allowable losses arising on the loss, destruction, dissipation or extinction of assets can only give rise to Share Loss Relief if they accrue on disposals by individuals after 5 April 2000 or by investment companies after 31 March 2000.

Negligible value claims

A deemed disposal of this sort is one of the four types of disposal on which Share Loss Relief may be due to individuals under ITA07/S131(3) and to companies under CTA10/S68(2)(see VCM74120). Share Loss Relief has been available in respect of losses which accrue on negligible value claims since its inception. For individual claimants this means the deemed disposal of the shares in question must have taken place on or after 6 April 1980. For company claimants, the deemed disposal must have been on or after 1 April 1981.