Taxes Consolidation Act 1997 Schedule 25A paragraph 6

Negligible value

Paragraph 6 prevents a company from making a negligible value claim in respect of shares where any loss arising on a disposal of those shares would be excluded from relief by section 626B.

• Where shares held by a company have become worthless, the company may ordinarily make a negligible value claim under section 538(2) to crystallise the unrealised loss and set it against chargeable gains.
• However, a negligible value claim may not be made if, by virtue of section 626B, any loss accruing on a disposal of the shares at the time of the claim (or at any earlier time at or after which the shares became negligible in value) would not be an allowable loss.
• The restriction ensures that a company cannot benefit from the section 626B exemption for gains while simultaneously claiming relief for losses on the same shareholding.
• In effect, if a gain on a disposal of the shares would be exempt under section 626B, the corresponding loss is also denied.