APPORTIONMENT OF BASE COST OF AGA RANGEMASTER GROUP SHARES FOR UK CAPITAL GAINS TAX PURPOSES
The comments below are intended as a general guide only and are based on current United Kingdom tax law and HM Revenue and Customs ("HMRC") practice as at 2 June 2008. The comments below relate only to shareholders who are resident and, if they are individuals, ordinarily resident in the United Kingdom for tax purposes and who hold (or held, as the case may be) their Existing Ordinary Shares, New Ordinary Shares, B Shares and C Shares beneficially as investments and not on trading account.
Defined terms on this page bear the meanings as set out in the circular to Shareholders dated 28 March 2008 (the "Circular") (a copy of which is available on the website) unless stated otherwise. Shareholders should read and rely on the whole of the Circular and not just the summarised information set out on this website.
Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the United Kingdom should consult an appropriate professional adviser.
On 9 May 2008, Aga Rangemaster Group's ordinary shares of 28 1/8 pence each ("Existing Ordinary Shares") were consolidated into New Ordinary Shares of 48 7/8 pence each ("New Ordinary Shares") in the ratio of three New Ordinary Shares for every five Existing Ordinary Shares held. On the same date Shareholders were issued with one B Share or C Share for each Existing Ordinary Share that they held at the Record Time.
As explained in Part 10 (United Kingdom Taxation in relation to the Return of Cash) of the Circular, for UK capital gains tax purposes (including for the purposes of UK corporation tax on chargeable gains), a shareholder's original base cost in his or her shareholding of Existing Ordinary Shares must be apportioned between his or her corresponding shareholdings of New Ordinary Shares, B Shares and C Shares. The gain or loss made by a shareholder on any disposal of New Ordinary Shares, B Shares or C Shares (including by way of redemption) will be determined by reference to the base cost that is apportioned to the shares that are disposed of. The apportionment must be made by reference to the respective market values of the New Ordinary Shares, B Shares and C Shares on the first day on which market prices were quoted or published for the New Ordinary Shares, which was 12 May 2008. The respective market values must be determined under sections 272 and 273 of the Taxation of Chargeable Gains Act 1992 ("TCGA").
Shareholders who elected, or were deemed to have elected, for the Dividend Alternative should note that part of their base cost in respect of their Existing Ordinary Shares will be apportioned to and will remain attributable to their C Shares in respect of which the Single Dividend is paid. Such shareholders should refer to Section 1(b) of Part 10 of the Circular for further information in this respect.
The New Ordinary Shares were first listed on 12 May 2008. On that date, the market value of each New Ordinary Share (determined under Section 272 of TCGA) was 285.875 pence. (Source: The Daily Official List of the London Stock Exchange - Calculated as the closing bid price plus one quarter of the spread on 12 May 2008.)
The B Shares and C Shares are unlisted and their market value must be determined in accordance with Section 273 of TCGA. In the case of C Shares issued under the Dividend Alternative and B Shares issued under the Capital Alternative, the Return of Cash was made on 29 May 2008 and for the purposes of this guidance the Company considers that the market value of such shares on 12 May 2008 should be equal to 121 pence on that date.
Shareholders who acquired their shareholding of Existing Ordinary Shares through a single original transaction should (before the application of any indexation, allowable losses or any other adjustments) apportion their base cost in respect of that shareholding of Existing Ordinary Shares as to approximately 58.636% to their New Ordinary Shares and approximately 41.364% to their B Shares or C Shares. This is based on a market value on 12 May 2008 of 285.875 pence per New Ordinary Share and 121 pence per B or C share. 5 Existing Ordinary Shares convert into:
(a) 3 New Ordinary Shares with a market value of 3 x 285.875p = 857.625p
(b) 5 B or C Shares with a market value of 5 x 121p = 605p
Total market value of 3 New Ordinary Shares and 5 B or C Shares = 1,462.625p
Apportionment of the base cost of Existing Ordinary Shares is therefore:
(a) to the New Ordinary Shares, 857.625p / 1462.625p = 58.636% of the base cost
(b) to the B or C Shares, 605p / 1462.625p = 41.634% of the base cost
Shareholders who acquired their Existing Ordinary Shares through more than one original transaction may be required to treat their Existing Ordinary Shares for capital gains tax purposes as two or more separate shareholdings of Existing Ordinary Shares, or "sub-shareholdings". Each sub-shareholding will have its own base cost, which would need to be apportioned between the New Ordinary Shares and B Shares or C Shares corresponding to that sub-shareholding. The apportionment would involve the same percentages as set out above being applied to the base cost of the sub-shareholding. Shareholders should note that the rules concerning sub-shareholdings are complex, and it is therefore recommended that shareholders who acquired their Existing Ordinary Shares through more than one original transaction consult an appropriate professional adviser.
An example of the CGT apportionment calculation are shown below. The example shown below is a hypothetical example, for the purposes of illustration only, and is unlikely to reflect the CGT apportionment calculation for any actual shareholder.
Shareholders who are in any doubt as to their base cost in respect of any Existing Ordinary Share should consult an appropriate professional adviser.
Simple hypothetical example (assuming a single original purchase of Existing Ordinary Shares and no indexation, allowable losses, incidental expenses or any other adjustments)
1000 Existing Ordinary Shares were purchased for, say, 200p each - Total cost = £2,000
1000 Existing Ordinary Shares become 600 New Ordinary Shares plus 1000 B/C Shares
Respective market values on 12 May 2008:
|New Ordinary Shares||600||x||285.875p||=||£1,715.25||(58.636%)|
|The base cost of the 600 New Ordinary Shares is:||58.636%||x||£2,000||=||£1,172.72|
|The base cost of the 800 B and/or C Shares is:||41.364%||x||£2,000||=||£827.28|
|These amounts together equal the base cost of the Existing Ordinary Shares||£2,000.00|
Shareholders who are in any doubt as to their base cost in
respect of any Existing Ordinary Share should consult an
appropriate professional adviser.
Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the United Kingdom should consult an appropriate professional adviser. The comments provided on this website are extracted from the Circular only. The comments provided in the Circular in relation to the Return of Cash are intended as a general guide only and are based on current United Kingdom tax law and HM Revenue and Customs practice. The comments apply only to Shareholders who are resident and, if they are individuals, ordinarily resident in the United Kingdom for tax purposes and who hold their Existing Ordinary Shares, New Ordinary Shares, B Shares and C Shares beneficially as investments and not on trading account.