SVM107080 - Capital Gains Tax Procedures: Quoted Shares

Section 272(3) TCGA 1992 provides that the market value of shares or securities listed in The Stock Exchange Daily Official List shall be the

Shares traded on markets such as AIM and Plus Market are not treated as quoted or listed for tax purposes. The CG Manual at CG59524 refers.

File Assessment Creation and Examination Team (FACET), part of the Inheritance Tax group, checks values of quoted shares for tax purposes.

In practice tax offices refer the question of the value of only a small proportion of quoted shares to FACET because copies of the FT Capital Tax Service (formerly Extel) are issued to them in order to minimise references to FACET. The Service contains a comprehensive list of:-

• all shares and securities quoted on the UK and Irish Stock Exchanges at 31 March 1982 and their values at that date adjusted as necessary for bonus/rights issues.
• all shares and securities becoming so quoted since 31 March 1982.
• any such shares and securities recognised by HMRC as having become of negligible value for CGT.*
• Unit Trusts in existence at 31 March 1982 or created since.

* A list of all shares or securities formerly quoted on the London Stock Exchange which have been officially declared of negligible value for the purpose of S24 (2) TCGA is maintained on the HMRC’s Internet site at www.hmrc.gov.uk/cgt/negligible_list.htm. This list is updated monthly.

Inspectors are instructed to refer to FACET only if the required information is not given in the Extel Service. References are usually received only where no prices are given by the parties or for special purposes, e.g. a disposal of a large block of shares not at arm's length. Any such valuations are referred on form CG29. FACET deal with the vast majority of valuations but refer the following matters to SAV:

• CGT cases where it is considered that there are ‘special circumstances’ in consequence of which the prices quoted are not a proper measure of the market value (Section 272(3) TCGA 1992.
• Claims that by reason of its size a holding should have a special reduction in price. (Such reductions are precluded by the IHT and CGT legislation.)
• All cases where any individual holding of shares with a full listing is valued at over £1,000,000 and/or where a holding of shares on markets such as AIM and PLUS exceeds £100,000 in value.
• Suspended quotations. (FACET will provide prices for the last day before the quotation was suspended and the first date after the quotation was re-opened, if appropriate.)
• Cancelled quotations, unless and until it is clear that the company is now an NQ and the former quotation is irrelevant for valuation purposes.
• Claims that shares, following suspension or cancellation of a quotation, have become of negligible value for CGT.

The instructions to Inspectors about valuing quoted shares are set out at in the CG Manual at CG 59510 +.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

If a form CG29 contains a request for valuation of unquoted shares, you should accept the CG29 in lieu of a CG30, seeking any necessary further information from the Inspector.