"Cost or market value" for capital gains calc on a closed co.

[lionheart79]

Hey folks. Closed my co. last year with MVL online which was very straightforward - highly recommend them.
On reviewing my tax return my accountant said "The numbers look fine although one very minor point is the cost of your co. shares of £2 could be deducted from the gain. Whilst the amount is immaterial HMRC would expect a cost of the shares."

At incorporation there was only 1 share issued to me and it remained unpaid for the duration of co. existence. There were no other shares issued. Therefore I believe, for the purpose of the capital gains computation, the "cost or market value" should be 0, not £1 (or £2, not sure where he got that from!). Unless you are supposed to put nominal value in?

Accountant has gone on a break so just sense checking here, seems completely immaterial but just want to do the right thing.
Ta

[Lance]

In my opinion your accountant is correct.

What has happened though is you've setup the company with capital but never actually paid it.
So I would suggest that you owed the company £1. And when you took the capital out you took out the gain + the £1. So just stick £1 in the purchase value of the capital on your SATR.

[Maslins]

Yeah, what Lance said.

No idea re £1 vs £2, I'd suggest discussing that with your accountant, seems some confusion over the number/value of shares in your company. Quite possibly you never physically paid it, in which case you'd still owe that amount to your company (so arguably should be added to the amount distributed, but then also be a cost).

Of course you're talking trivial sums here, so I wouldn't get overly bogged down in it...but yes, legally you "bought" your company for the cost of setting it up. This would typically be whatever the initial share capital was, potentially plus Cos Hse fees and/or accountancy fees related to incorporation. You then "sold" it for the distributions.

[lionheart79]

Thanks both for your responses, makes sense. And happy new year !