A way of avoiding the UK’s CGT on the Vodafone windfall

There’s something called an EIS scheme

In the past, GoMo News has written a great deal about the forthcoming £84 billion Vodafone windfall payment. Elsewhere in the Press, there has been much speculation about the forthcoming Vodafone share bonanza which will follow the sale of its stake in US mobile network operator (MNO) – Verizon Wireless. Especially given the whopping tax bill that this free windfall will present to some of the army of 500,000 or so UK private Vodafone shareholders. Hence, one GoMo News reader has written in with his way of avoiding all of the UK’s CGT (Capital Gains Tax) on the Vodafone windfall. It might be a scam but it seems to be a clever one. So read on at your peril.

Our reader argues here is, however, one potential tax free solution.

Any typical UK shareholder who has already utilised his or her full CGT (Capital Gains Tax) allowances, could do than to ‘roll-over’ their capital gain by investing into an Enterprise Investment Scheme (EIS) start-up.

This scheme certainly exists and details of the Enterprise Investment Scheme are available on the UK government’s site here.

EIS is designed to encourage investments in small unquoted companies carrying on a qualifying trade in the United Kingdom.

Our tipster – who goes by the psuedoname of Jakester, argues that UK citizens will be eligible for not only a 30 per cent tax refund (applicable to the previous or current tax year – which ever they choose).

In addition they should also qualify for a further CGT deferral of 28 per cent (and IHT [Inheritance Tax) deferral if the investor has that tax position as well) – the CGT deferral can be applied to any of the last three tax years.

In the case of Vodafone shareholders, it will be the 2013/2014 year that is hurting them most.

Best of all, the exit is CGT free so long as you retain your shares for the minimum three year EIS period.

So, Jakester asks, is this not a perfect win-win for all of those reaping the benefits of the Vodafone /Verizon Bonanza?

So far, so good. This is where the scam bit kicks in. Jakester is recommending that GoMo News readers invest in the Alumni Oil Group which should qualify under the EIS scheme.

Hmm. But what do GoMo News readers know about oil exploration? Very, very little we would suspect.

It has, however, got us wondering if there are any firms in the mobile/cellular world operating in the UK that also qualify under the EIS scheme instead? We reckon they should contact us.

In the meantime, don’t do anything with your Vodafone shares until you have talked to an approved financial advisor. But it might just be worth asking about EIS.

Our financial correspondent says  … I can’t find any evidence that this is a boiler room scam. But that said, how do you check out an African oil exploration company with no financial pedigree?

About Hans Cett

Hans Cett is an established freelance author and consultant specialising in the mobile communications industry. He also writes for Countdown2MWC - http://countdown2mwc.wordpress.com/
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