How to crystallise CGT loss on Atlantic Resources shares bought in 1984?

R

Right Winger

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Older posters might remember the oil mania that gripped Ireland back in the 1980s. The Kinsale gas field was in its prime and the Celtic Sea was going to be the new Gulf. Tony O'Reilly had founded Atlantic Resources and they had struck oil! A bottle of the black gold was duly exhibited on RTE - the excitement was massive! Ireland was going to be as rich as Saudi, with more moderate weather. And better still, everyone could join in and buy shares. It was a guaranteed winner, what could possibly go wrong? The share price was soaring by the day.

Being young and without responsibilities, my student level spending skills hadn't yet caught up with my newfound graduate earning ability, so I was fairly flush with money. A thousand pounds was duly invested, and I sat back to await my oil sheikh bonanza. All went well initially and soon my holding was worth £1500. And then it wasn't. Slowly at first, and then more rapidly, my holding dropped in value until eventually it was worth about a tenner or so. Rights issues, restructuring and recapitalisation followed and at some point Atlantic Resources ceased to exist, was sold off and I was issued some shares in Providence Resources. Which were worth a pittance. I vaguely remember a letter saying that I would no longer automatically get shareholder correspondence but could register to continue receiving it if I wished. I didn't. As far as I know, I am still the proud owner of a very small shareholding in Providence, probably worth a Euro or thereabouts.

So the following questions occur to me:
1. Can I "cash in" these shares, incur a capital loss and offset it against an expected capital gain this year.
2. If yes to Q1, does the loss have to be offset at the first opportunity, or can it be carried forward to a later year.
3. What are the mechanics of cashing in? I have no share certificate, no correspondence, (all discarded over the years) and my then address no longer exists.

Any thoughts appreciated!
 
Search for Revenue documents mentioning shares of "negligible value" and CGT treatment of same in case it's relevant to your situation.
 
1) You appear to have shares in Providence Resources
2) Check with the Registrar of Providence Resources to see how many you have and then you will know if they are worth anything
3) You may have to pay for an indemnity to get new share certificates issued for the old share certificates you have lost.
4) The cost of this indemnity and the cost of selling the shares may exceed their value
5) If so the negligible value rules come into effect
6) Revenue does not spend its resources checking and auditing claims for a Negligible Value claim of £1,000 or €1,270
7) If you spent €1,270 in 1985, then you can index it for inflation by about 1.8 meaning your claim would be for a loss of €2,200
8) If you make a negligible value claim, I think you must set that against your gains before your annual exemption of €1,270, so exercise your claim when you have €3,470 of Capital Gains to use.
 
....and subscribing to this.

Oil Database Publication 1984 Ireland For Sale in Blackrock, Dublin from MetalBox

Oil Database Publication 1984 Ireland, Used Other Antiques & Collectables For Sale in Blackrock, Dublin, Ireland for 4.00 euros on Adverts.ie.
www.adverts.ie

Like a lot of people I have a file with various share certificates. With so many name changes, rights issues, consolidations etc it became impossible to keep track......but I think that was the idea.
 
Brendan,

Thank you very much for a most comprehensive reply. You have hit the key spots and hopefully this will be of use to more people than myself. I'm sure I wasn't the only idiot who flushed good money down this borehole!
I will follow your suggested approach and report back on how things go.

Brendan Burgess said:
1) You appear to have shares in Providence Resources
Click to expand...
Apparently I do. It was a long time ago and I vaguely remember correspondence to the effect that my Atlantic share were being exchanged for shares in, I think, Arcon, which then became Providence.

Brendan Burgess said:
2) Check with the Registrar of Providence Resources to see how many you have and then you will know if they are worth anything
Click to expand...
Yes, I certainly will.

Brendan Burgess said:
3) You may have to pay for an indemnity to get new share certificates issued for the old share certificates you have lost.
Click to expand...
I had a share certificate in Atlantic (lost or discarded many years and house moves ago.) To the best of my recollection, I never actually held a share certificate in Providence, although I was entitled to acquire one.

Brendan Burgess said:
4) The cost of this indemnity and the cost of selling the shares may exceed their value
5) If so the negligible value rules come into effect
Click to expand...
A very sensible, though I suspect not a well-known concept. Thanks to you and @ClubMan for pointing it out.

Brendan Burgess said:
6) Revenue does not spend its resources checking and auditing claims for a Negligible Value claim of £1,000 or €1,270
Click to expand...
Well, it's a self assessed tax so I suppose that makes sense. Although the Revenue site does mention "full supporting documentation" to substantiate a claim. We shall see.

Brendan Burgess said:
7) If you spent €1,270 in 1985, then you can index it for inflation by about 1.8 meaning your claim would be for a loss of €2,200
Click to expand...
Better still!

Brendan Burgess said:
8) If you make a negligible value claim, I think you must set that against your gains before your annual exemption of €1,270, so exercise your claim when you have €3,470 of Capital Gains to use.
Click to expand...
Yep, that makes sense, thanks again. I presume I could use my ordinary exemption this year and "save" the negligible value claim to be set off against a more substantial gain in some future year?
 
I can't find the Revenue guidance on it but here is charteredacccountants.ie stating that indexation cannot be used to create a loss or to increase a monetary loss so would not apply in this case.
 
Mrs Vimes said:
I can't find the Revenue guidance on it but here is charteredacccountants.ie stating that indexation cannot be used to create a loss or to increase a monetary loss so would not apply in this case.
Click to expand...
Correct.
See attached.
 

Attachments

  • 234230_e1c3dc35-04c3-4e6e-b641-91051aa6425d.pdf
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Mrs Vimes said:
I can't find the Revenue guidance on it but here is charteredacccountants.ie stating that indexation cannot be used to create a loss or to increase a monetary loss so would not apply in this case.
Click to expand...
Ah well, pity about that, an indexed allowable loss would have been nice.
Gordon Gekko said:
Which is outrageous when you think about it.
Click to expand...
Totally agree. Completely illogical but that's the Irish tax system for you.
 
Right Winger said:
Yep, that makes sense, thanks again. I presume I could use my ordinary exemption this year and "save" the negligible value claim to be set off against a more substantial gain in some future year?
Click to expand...
I don't think so. You must use the loss at the first opportunity as far as I know.
 
Ciru75 said:
I don't think so. You must use the loss at the first opportunity as far as I know.
Click to expand...
Yes indeed if there is a loss, but if I don't actually crystallise the loss, what happens? Suppose for argument, I have a share certificate that's worth a few cents. Until I actually dispose of it, or make a claim for negligible value, surely no loss arises? Or am I missing something?
 
Providence became BARRYROE and the oil/gas is still out there! Our Green Minister for Energy will not allow them bring it ashore though. Seems more logical to import from some vicious dictatorships as well as more normal oil/gas exporting countries, rather than bring our own stuff ashore and allow Ireland to benefit.

We need fossil fuels in the period we are transitioning to wind/sun etc.
 
But, but, now you're bringing logic into it. Greens don't do logic. Just feel the emotion and signal your virtue instead. Nasty oil! Bad gas! Just stop it! Keep it in the ground! Don't build an LPG terminal!
 
Brendan Burgess said:
7) If you spent €1,270 in 1985, then you can index it for inflation by about 1.8 meaning your claim would be for a loss of €2,200
Click to expand...
that really illustrates how investors have been shafted since indexation was abolished, its especially so now that we are back in the era of high inflation. Not a whimper out of Paul Murphy or Richard Boyd Barret about this unfairness though
 
Apologies, I misunderstood what you meant. It would make sense to hold off making the negligible value claim until it's most useful.
 
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