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The ChessMaster,
I would be interested to read your comments re the the Board's failure to provide guidance on the tax implications of the special dividend.
AGE
If you want to see how a Board of Directors ensured they sought tax advice re the payment of a special dividend then have a look at the Fuller, Smith & Turner PLC website and you will see two documents that were produced for shareholders.
The documents are in the Corporate/Investors/General Meetings section and one document is called "Circular to Shareholders and notice of extraordinary general meeting" and the other is called "Return of Capital CGT Guide"
The first document states:
"Taxation
Part V (United Kingdom Taxation) in this Circular describes the tax treatment of the Return of Capital for
different types of Ordinary Shareholders and includes information intended to assist United Kingdom tax
resident Ordinary Shareholders to calculate their likely UK CGT liability and to understand when and how
payment of any CGT should be made to HMRC"
Compare this to the situation AMC shareholders are in as a large number of us received big dividends which exceed the annual dividends tax free amount and take us into the 40% tax bracket and those shareholders who do not read LSE or ADVFN and they are totally in the dark as to how they should treat the special dividend in their tax return!
AGE
The tax issue with the special dividend is yet another reason to create an AMC Shareholders Share Action Group as I will then have members email addresses and I can email you all the document that I am going to attach to my tax return.
It would not hinder my case if we all use the same document.
Once it goes to the tax tribunal and they Judges decide in our favour that the special dividend is a return of capital then HMRC will have to process our tax returns based upon the decision in the tax case.
If I communicate with HMRC it will take them ages to respond and the 2023/2024 tax year ends on the 5 April 2024 so there is no point writing to them.
Have you not seen that HMRC have closed their telephone helpline service as they have a massive back log of unanswered post so they are taking their staff of of the helpline service to deal with the backlog?
AGE
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Agness
Would it hinder or help your case for anyone else interested to use the same wording as yourself ?
Can some peeps using different wording get a different result?
if you go to all this trouble and get capital return result, does that apply to all others or is each case assessed separately? If so it seems unfair its the first applicant who has does all the work and others don't have to.
IS THERE ANYTHING THAT OTHER AMC HOLDERS CAN DO WHICH WOULD HELP YOU.
For the time involved is it worth sending email or letters with the document you are suggesting asking amc to confirm its capital repayment.
nb after your previous musings on this I was going to put it it the tax form under capital loss uk share.
The ChessMaster,
Thank you for your comments.
You make some good points.
I am going to wait to hear more about the RTO before making a final decision.
I would be interested to read your comments re the the Board's failure to provide guidance on the tax implications of the special dividend.
To me this demonstrates incompetence on behalf of the Board which make me wonder if they are not capable of carrying out proper due diligence on paying a special dividend then how the hell will they do an RTO?
They do not inspire me with confidence in their abilities!
AGE
Gwm121 as explained before when I submit my tax return for 2023/2024 I am not going to put my £60 of dividends in the foreign dividends section of mt tax return but I am going to provide information in the white box section of my return and I am going to attach a word document to my tax return that will be 15 to 20 pages long and I will provide reasons as to why I believe it is a return of capital.
HMRC will then disagree and then they will amend my tax return to include the foreign dividend and charge me dividends tax on £60k.
I will then appeal against their amendment to my tax return and then there will be correspondence between HMRC and myself and if we cannot come to an agreement then it will have to go to a tax tribunal.
If you read the John Buckingham case you will see that one Inspector of Taxes agreed that the majority of the dividend was a return of capital and the remainder was income in the hands of John Buckingham and the other Inspector who reviewed the case was of the opinion that it was all income in the hands of Mr Buckingham.
The First Tier tribunal agreed with the first Inspectors opinion!
As I said this is all so unnecessary if the Board had sought advice.
If you send the Board a message via the AMC wesbite they do not even have the courtesy to reply!
AGE
TheChessMaster, you are doing a good job of trying to convince shareholders to vote in favour of the RTO!
But you have not convinced me!
I will await to see their proposal re an RTO but in the mean time I would like to form a Share Action Group as quickly as possible as that way we will all know in advance what support we can muster to block an RTO if we do not like it
If we do like the RTO then we can influence the new Boards plus Robin Young's future actions!
As far as I can see there are no draw backs creating an AMC Shareholders Share Action Group as it empowers shareholders as we cannot rely on Boards to act in the shareholders best interests!
There are 130 members in our Scirocco Energy PLC (SCIR) Shareholders Share Action Group and we have demonstrated our combined power by blocking the Board's ability to do any more share placings!
Over a period of 13 years SCIR has received £37,414,000 from issuing shares and the Board have been paid total remuneration including share based payments of £5,037,000 and the Company is currently worth £2.7m!
AGE
If they do that then legal action will commence!
AGE
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As I said, Those automatically voting against the proposal will not automatically get the remaining cash.
If the proposal is rejected, I fully expect them to delist and seek other opportunities whilst squandering the remaining cash, they can stay delisted for years.
So holders who want to see some return need to give careful consideration as once the delist, there 's no certainty at all that you will ever get any capital back.
TheChessMaster, you are doing a good job of trying to convince shareholders to vote in favour of the RTO!
If they do that then legal action will commence!
AGE
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As I said, Those automatically voting against the proposal will not automatically get the remaining cash.
If the proposal is rejected, I fully expect them to delist and seek other opportunities whilst squandering the remaining cash, they can stay delisted for years.
So holders who want to see some return need to give careful consideration as once the delist, there 's no certainty at all that you will ever get any capital back.
If the dividend is income in the hands of shareholders then we have to pay dividends tax on it depending upon the total amount of the dividends and this is not going to reduce the tax base cost of our shares.
If it is a return of capital then the special dividend is not subject to dividends tax and it does reduce the tax base cost of our remaining shares.
I have some AMC shares where the dividend of 1.80 p per share is more than I paid for them so I will make a profit on them but the majority of my shares cost more than the special dividend and any 2nd dividend should we receive it if the RTO is rejected.
AGE
Gwm121 it was me who provided information that the special dividend was a return of capital rather than income in the hands of shareholders which would be subject to UK dividends tax if your shares are held outside of a tax advantaged wrapper such as an ISA.
The problem is that HMRC will argue that it is a dividend so it is subject to dividends tax as when something falls within a grey area they will be argue that falls into an area where they can tax you on it.
They will do so on the basis that it is called a special dividend and a dividend is income in the hands of shareholders so it is subject to dividends tax.
The Board have not provided shareholders with sufficient information as they only produce a consolidated balance sheet however distributable reserves are based upon the balance sheet of AMC PLC and not the AMC PLC Group.
There is a first tier tax tribunal case called John Buckingham V HMRC which is similar to AMC's situation however first tier tax tribunal cases do not create a binding precedent that can be applied in our situation.
I suspect that we will have to go to a tax tribunal to obtain a decision!
This is all so unnecessary as the Board should have done their job properly and sought tax advice on the tax implications of paying a special dividend.
AGE
RNS dated 5 August 2022
The Company has received tax advice that the Disposal is unlikely to attract capital gains or withholding tax.
There is no CGT or withholding tax on the disposal of the shares in the subsidiary that owned the mining licence however that does mean that there are no tax implications for the payment of the 1.80 pence special dividend yet it included in the same RNS and no mention of the tax implications for shareholders!
AGE
Because the Robin Young will join the Board of the Pharma Company and he has mining knowledge but obviously not even basic tax knowledge or common sense to ask their solicitors are there any tax implications for AMC shareholders if we pay them a special dividend!
AGE
Shadowless the last interim accounts to the 30 June 2023 shows that they had $6.314m of cash and cash equivalents.
8 Months have passed since then so they must have spent between $1m to $1.5m since then.
Let's summarise what the Board have done in the last year or so
They sold the mining licence for $35m (They are to be congratulated on that achievement as we could have lost all our money)
They paid a special dividend of 1.8 pence per share to shareholders but to date they have failed to issue guidance on whether the special dividend is considered to be income in the hands of shareholders so subject to dividends tax or whether it is a return of capital.
If they would have sought tax advice then they would have loaded it up onto their website.
On the basis they have not done so is a strong indicator that they did not seek tax advice on this very important matter.
What competent Board would get shareholders to approve the payment of special dividend without first obtaining tax advice.
The RNS stated that they are no tax implications on the sale of the subsidiary company that owned the mining licence however this only relates to Amur Minerals PLC sale of the subsidiary.
The Board of AMC have left all shareholders in a difficult position tax wise!
My dividend was over £60k so I do not want to be hit with UK dividends tax at the following rates:
Tax band Tax rate on dividends over the allowance
Basic rate 8.75%
Higher rate 33.75%
Additional rate 39.35%
I would have had more faith in the Board of AMC if they would have sought tax advice!
AGE
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md and cm agree,
for me, who has only a few million shares left, worth seeing what is proposed until deciding. as thechessmaster has stated the proposal might excite the market's imagination which may result in an exit point higher than the current cash value.
currently, they may have £3m-£5m (*** packet calculations, or should i say vaper packet calculations for the youngsters ) 0.0021p to 0.0035p.
reminds me a little of general industries rto of immupharma!! when was that 2006? i was a youngster then.
Because it takes time to form a Shareholders Share Action Group and we need to be prepared and ready to take action should we need to do so!
From memory AMC hit a high 43p a low of 0.60p so I have had enough of jam tomorrow that never arrives from the Board of AMC!
AGE
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Why not just see what is presented then give it some thought instead of circling the wagons and breaking out the guns
MD
Slowly slowly thank you for that information.
I would prefer the AMC Board return the remaining cash so that I can decide what should happen to it rather than paying the well paid part time Board of AMC to spend shareholders money on yet another high risk venture.
I am sure the majority of retail shareholders are of the same opinion but let's see how people respond to the idea of forming a Shareholders Share Action Group!
AGE
You would not be cross ramping you would just be providing proof that there good opportunities hence the RTO for a small UK Pharmaceuticals Company is going to be beneficial for AMC Shareholders.
AGE
Slowly slowly thank you for your detailed explanation of the purpose of an RTO.
Would you kindly give me one example of an AIM Company where the Board have created shareholder wealth and also one UK Pharmaceuticals Company that has also managed to create shareholder wealt and that it has not done endless highly dilutive share placings!
AGE
Slowly slowly I am waiting for a reply to my questions below?
But going by your LSE nickname it may well take you a while to respond!
AGE
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Slowlyslowly given me one example of an AIM Company where the Board have created shareholder wealth!
Do you work for AMC's PR firm by any chance?
If you think that Shareholder Share Action Groups cannot achieve much then have a look at the LSE AMC forum and you will see that we managed to get a vote of 33% against the resolution to approve share placings so we blocked the Board as they needed 75%.
AGE
I have nearly 11 million AMC shares so we would be off to a good start in forming a AMC Shareholders Share Action Group!
Any more of you want to join me in forming our Group?
I will administer it by obtaining your contact details and shareholdings so that we know how many shares in total that we can organise to vote against the RTO if we are not satisfied with it.
It takes time to arrange all of this so best to plan well ahead and put a plan of action in place should it be needed!
AGE
I suggest we form a AMC Shareholders Share Action Group and then we all vote against the resolution for an RTO if it is not going to create value for AMC Shareholders.
Just have a look at the Scirocco Energy (SCIR) LSE forum where the Board sold its main asset at a loss of £7.813m it then managed to get shareholders to change direction by going into the Green sector and they loaned £1.578m in total to EAG Ltd that they only owned 50% of it's shares to then buy GGL for £700k with 80k for solicitors costs and £100k for due diligence costs and GGL had negative net assets of £250k so a net liability.
They then sold EAG/GGL fot £702k with £150k of contingent consideration to loose between £725k to £875k depending upon whether they receive the contingent consideration or not.
The largest shareholder has requisitioned a General Meeting to return the remaining cash to shareholders before they squander it but the Chairman has other ideas as he wants shareholders to vote against the resolution to give him more time to do an RTO or invest in the Green sector.
The Chairman of SCIR's record on creating value for shareholders is absolutely appalling!
Would any of you be interested in creating an AMC shareholders share action group and then we can collectively block the RTO if we are not satisfied it?
EAG
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Judging by the other shareholder meetings they will easily get it passed. No one cares enough to do anything else. It's not the greatest and it will likely perform very poorly in this market, but it's better than expected. Returning cash would be better, but how do you force them to do it.