Details on Contract Note

lindabea

I sold some units from my Vanguard GA last year, and I noticed that although the contract note shows the selling price of the units as well as the total units sold, it does not however show the average unit cost.  So my question is, if HMRC ask me for a document to prove the acquisition cost of those shares, what can I give them.  Of course, I can give them all the contract notes that made up the total shares from which the average price can be derived, but this seems too laborious. 

It would seem to me that it would be a far simpler process if Vanguard (and perhaps other platforms) would show the average unit cost at the time of sale as well as the selling price, and maybe even the total number of units held.

I can't find anything on Vanguard that would make this process of determining the gain/loss for CGT purposes any easier, other than keeping my own record of the average price.  But my concern is that I do not have any official document to prove it, other than the individual contract notes which if investing on a regular basis, could run into hundreds of documents. 

I would be interested in anyone's experience with dealing with HMRC regarding CGT.  Do they just accept your figures or do they tend to ask for proof.  .      

wmb194

lindabea said:

I sold some units from my Vanguard GA last year, and I noticed that although the contract note shows the selling price of the units as well as the total units sold, it does not however show the average unit cost.  So my question is, if HMRC ask me for a document to prove the acquisition cost of those shares, what can I give them.  Of course, I can give them all the contract notes that made up the total shares from which the average price can be derived, but this seems too laborious. 

It would seem to me that it would be a far simpler process if Vanguard (and perhaps other platforms) would show the average unit cost at the time of sale as well as the selling price, and maybe even the total number of units held.

I can't find anything on Vanguard that would make this process of determining the gain/loss for CGT purposes any easier, other than keeping my own record of the average price.  But my concern is that I do not have any official document to prove it, other than the individual contract notes which if investing on a regular basis, could run into hundreds of documents. 

I would be interested in anyone's experience with dealing with HMRC regarding CGT.  Do they just accept your figures or do they tend to ask for proof.  .      

Presumably Vanguard will have statements you can download? That should be enough and otherwise yes, you need to work it out yourself. The problem is that platforms don't know whether you own the same securities with other platforms and brokers - I certainly do and they form a 'pool' - so any average price or CGT calculation they make could be misleading. Plus it's your problem so I'm not surprised it stays out of it, there are only downsides to getting involved.

The chances that HMRC will question anything are small and it'll usually accept your figures but I remember reading someone's account of what happened when HMRC questioned their CGT calculations. They said HMRC was happy to work with a broker's statement, they didn't have to dig out each and every contract note.

Hoenir

Worth keeping your own records. Keep copies of the contract notes and log them onto a spreadsheet.  Easy then to calculate profit/loss on disposals. 

lindabea

Hoenir said:

Worth keeping your own records. Keep copies of the contract notes and log them onto a spreadsheet.  Easy then to calculate profit/loss on disposals. 

That's exactly what I'm doing.  But as I said, my concern is if I need to submit official proof of the CGT calculation to HMRC.  I don't like the idea of having to download all the contract notes.  It would be an absolute nightmare. 

ColdIron

lindabea said:

I sold some units from my Vanguard GA last year, and I noticed that although the contract note shows the selling price of the units as well as the total units sold, it does not however show the average unit cost.     

That's because the contract note is only relevant to the trade

So my question is, if HMRC ask me for a document to prove the acquisition cost of those shares, what can I give them. Of course, I can give them all the contract notes that made up the total shares from which the average price can be derived, but this seems too laborious

It's the only accurate way to do it. If you keep a running total in Excel from the start it's a trivial exercise. One line per transaction with a subtotal

It would seem to me that it would be a far simpler process if Vanguard (and perhaps other platforms) would show the average unit cost at the time of sale as well as the selling price, and maybe even the total number of units held.

Again this is outside the purpose of the contract note which is only concerned with a specific trade. The platform may not even know the costs of acquisition (along with transaction fees, stamp duty) if one or more in speccie transfers took place as these figures do not usually follow the transfer

I can't find anything on Vanguard that would make this process of determining the gain/loss for CGT purposes any easier, other than keeping my own record of the average price.

I would not trust any figure from the platform. It would have to cope with stock splits, open offers and other corporate actions and I doubt they would want to take on the burden of responsibility to HMRC

But my concern is that I do not have any official document to prove it, other than the individual contract notes which if investing on a regular basis, could run into hundreds of documents. 

Your contract notes are those official documents

I would be interested in anyone's experience with dealing with HMRC regarding CGT.  Do they just accept your figures or do they tend to ask for proof.  .

Broadly yes they accept your figures unless they challenge you and then you will need those contract notes. As I recall you don't just add a figure as you would with earnings or interest, you would supply your workings (costs including trx fees, stamp duty, maybe equalisation payments, dividends etc and realisation amounts)

One of the often overlooked duties of a GIA is keeping full and accurate records. The only sane way to do it I find is Excel (or similar) and a running total from the get go, then it's a doddle

Doing it from scratch for every sale would give me sleepless nights

It also discourages you from making dozens (hundreds?) of tiny transactions which is probably not a bad thing

IanManc

lindabea said:

I sold some units from my Vanguard GA last year, and I noticed that although the contract note shows the selling price of the units as well as the total units sold, it does not however show the average unit cost.  So my question is, if HMRC ask me for a document to prove the acquisition cost of those shares, what can I give them.  Of course, I can give them all the contract notes that made up the total shares from which the average price can be derived, but this seems too laborious. 

It would seem to me that it would be a far simpler process if Vanguard (and perhaps other platforms) would show the average unit cost at the time of sale as well as the selling price, and maybe even the total number of units held.

I can't find anything on Vanguard that would make this process of determining the gain/loss for CGT purposes any easier, other than keeping my own record of the average price.  But my concern is that I do not have any official document to prove it, other than the individual contract notes which if investing on a regular basis, could run into hundreds of documents. 

I would be interested in anyone's experience with dealing with HMRC regarding CGT.  Do they just accept your figures or do they tend to ask for proof.  .      

As well as the issues that @wmb194 has highlighted, if you hold income units in a GIA then you have to deduct the equalisation payment that you receive with your first dividend from the capital acquisition cost, as equalisation payments are a return of capital. This increases your potentially taxable gain.

Even so, that's easier than unwrapped accumulation units, where you have to identify and declare for income tax the retained income each year, and then deduct all the retained income that you've paid income tax on from the proceeds of sale of your units before you can work out your taxable gain. That's a nightmare where there have been multiple purchases.

That's why I only have income units in my GIA. 

Really you are expecting too much for a platform to do all the various necessary calculations for you for nothing.

Hoenir

lindabea said:

Hoenir said:

Worth keeping your own records. Keep copies of the contract notes and log them onto a spreadsheet.  Easy then to calculate profit/loss on disposals. 

That's exactly what I'm doing.  But as I said, my concern is if I need to submit official proof of the CGT calculation to HMRC.  I don't like the idea of having to download all the contract notes.  It would be an absolute nightmare. 

Download and save PDF copies. No need for hard copies. When dealing with tax affairs always best to retain documentary evidence. As you never know when you might be challenged to support your tax return figures. . 

How many trades are you undertaking on a monthly basis? 

GeoffTF

HMRC will have the contract notes. You are responsible for knowing all the rules and calculating your own capital gains. If you are unable to do that, you need to hire an accountant. HMRC periodically checks tax returns and takes action against the tax payer if they are incorrect.

AmityNeon

lindabea said:

Hoenir said:

Worth keeping your own records. Keep copies of the contract notes and log them onto a spreadsheet.  Easy then to calculate profit/loss on disposals. 

That's exactly what I'm doing.  But as I said, my concern is if I need to submit official proof of the CGT calculation to HMRC.  I don't like the idea of having to download all the contract notes.  It would be an absolute nightmare. 

Incorporate time into your regular routine to complete the necessary personal administration. It’s no different than bank statements (of which I receive far more than I do contract notes). Thankfully everything is digital these days so thousands of sheets doesn’t take up any physical storage space.

eskbanker

GeoffTF said:

HMRC will have the contract notes. You are responsible for knowing all the rules and calculating your own capital gains. If you are unable to do that, you need to hire an accountant. HMRC periodically checks tax returns and takes action against the tax payer if they are incorrect.

No doubt HMRC will be able to obtain relevant data from platforms in the event of an investigation, but I wouldn't have thought that they'd have an archive of all historical contract notes to the extent of being able to validate any individual's CGT calculations, routinely as opposed to a one-off exercise, but happy to be corrected?

DavidAC

I have a Vanguard General Accumulation account and quite franky do not know where to start if I have to fill in a tax return. I opened it near the peak of the market about 2 years ago and it has been in a capital loss virtually from the start. Being an accumulation account do the dividends that it automatically reinvests need to be declared, or is this declared as part of the capital gain/loss?

With the hassle I will probably sell it all before it returns a significan capital gain, maybe bed and ISA next tax year. I have less than 20K in it.