EIS loss relief

[petergibbinson]

I am still stuggling with EIS loss relief, due to currently being temporary UK non resident.
Losses and gains are rolled up in the year of return if you are a temporary UK non resident (which makes sense as you dont know if you are temporary non resident, or will complete 5 full tax years and become permanent non resident until you actually return to the UK)
So I have made a loss on an EIS investment, but the time limit to claim loss relief is the end of January following the tax year of the loss (in my case Jan 31 2012)..However as a temporoary non resident I haven't actually made a valid loss yet (and won't until the year I return to the UK or not at all if I am absent for more than 5 full tax years..)
Bit of a circualr argument!
So can I make a loss relief claim when I return to the UK (assuming I have only been a temporary non resident) even though I will then be outside of the time limits? Or do I lose the chance for loss relief (against income) forever? Does the loss then just form part of my accumulated capital gain or loss during my period of absence on my return and form part of the overall CGT calculation?

[maths]

Some of your terminology is incorrect.

However, in substance, any capital loss arising on a disposal of EIS shares arises either;
(a) in the tax year of return (which is the case should you return within 5 tax years of leaving the UK); or
(b) is deemed to arise in the tax year of sale if you remain outside the UK for at least 5 tax years.

Under (b) the loss would not qualify as an "allowable" capital loss and hence could not be utilised.

Under (a) the time limit for claiming relief would be from the end of the tax year of return.

[petergibbinson]

Thankyou, that makes perfect sense.

[maths]

In a recent Note published by the CGT Liason Group concerning Entrepreneurs' Relief the interaction of ER and temporary non-residence was discussed.

Perhaps surprisingly, HMRC's view is that the deadline for filing a claim for ER runs from the tax year of the disposal not the tax year of return of the non-resident even though the latter is the tax year in which (under s 10A) the capital gain/loss is regarded as arising (assuming return to UK within 5 complete tax years).

It therefore appears to me that HMRC may presumably take the same view regarding a claim for EIS share relief (ie a capital loss) against other income; if so the deadline will be the anniversary of the filing date of tax year in which the loss arises and not the anniversary of the filing date of the tax year of return. If this is correct, then the non-resident can only protect the loss by filing a protective claim whilst non-resident.

[petergibbinson]

Thanks Maths..not quite sure how I may a loss relief claim on my SA return in prepapration of a possible loss depending on whether I have/or have not satisfied the 5 year temporary non residence rule in the future!..I thought the SA online filing does the calculation automatically and will take the tax relief off income for that year, which isnt correct (it needs to be in my year of return)