CG13135 - Introduction and computation: occasions of charge: assets lost/destroyed/negligible value: How to make a negligible value claim

How to make a negligible value claim

Time limit for claiming relief

There is no requirement for the claimant to make a claim to HMRC within a specified time of the asset having become of negligible value.

Form of claim

There is no specified form that must be used in order to make a negligible value claim. The claim may be made in any form the claimant chooses provided that it is made in writing and identifies:

  • the claimant and their unique taxpayer reference
  • the asset which is the subject of the claim (in the case of shares this would be the name of the company the shares are held in, the class of shares and the number of shares held).
  • the value which is to be used as the consideration for the deemed disposal. Normally the value will be nil, but the claim should specify this.
  • if the effect of the claim is to be backdated as per s24(2)(b) TCGA92, the earlier date when the claim is to take effect.

If a claim is sent outside of a tax return, it must also be signed by the claimant.

If you receive an indication that a negligible value claim is intended but the claim is not in the proper form, you should write to the claimant setting out the information which is needed to put the claim in the proper form.

Claims by companies should be made in accordance with Sch 18 Part VII FA98 (see CTM90600 onwards) and by other persons in accordance with s42 TMA70 (see SACM3000 onwards).

The date of the deemed disposal should be specified in the claim if the claimant wants the asset deemed to be sold and reacquired at a date before the claim was made (see CG13130.

When you acknowledge that you have received a negligible value claim, it is preferable to avoid using words such as 'accept' or 'admit' which might lead the claimant to believe that their claim is acceptable at that stage. This is particularly important where any necessary valuations (see, for example, CG13140) have still to be negotiated or agreed.

The following paragraphs give guidance on dealing with negligible value claims:

Remember that a successful negligible value claim simply results in the claimant being treated as if the asset that is the subject of the claim had been sold and immediately reacquired for its negligible value. Any allowable loss accrues from that deemed disposal rather than from the negligible value claim itself. So a negligible value claim should only be refused if the conditions for the claim are not met because

  • the claimant is not the owner of the asset when the claim is made (i.e. because there has been an earlier disposal of the asset, such as a disposal within s24(1) TCGA92), or
  • the asset has not BECOME of negligible value (see CG13125) at the date of the claim, or any earlier date specified in the claim when the claimant wants the asset deemed to be sold and reacquired.

If, as a result of a satisfactory negligible value claim, there’s a capital loss, it is necessary for the claimant to notify that capital loss to HMRC in order for it to be an allowable loss. This notice needs to be given in addition to a negligible value claim, although the two things may be sent to HMRC in the same return, letter or other document. A negligible value claim should not be refused on the grounds that the quantum of any allowable loss accruing from the deemed disposal cannot be agreed. For guidance on how to agree the amount of any allowable loss arising from a disposal, see CG15800P.