You're suspended!

So new rules were introduced in 2005 to combat the problem of inactive shell companies. An investment company must now raise a minimum of £3m in cash on or immediately before admission; it must make an acquisition within 12 months of its admission to Aim; it must exceed 50 per cent in each of the relevant class tests and, finally, it must file its reports on time.

A company's shares are automatically suspended if it is unable to make an investment within the one-year time frame and then, if after a further six months it still has not made any investments, its admission is cancelled. Likewise, a company that is unable to file its results on time also has its shares suspended.

Partly as a result of these rules the number of companies on Aim has dropped. At the end of March 2011 there were 1,174 companies with a total market value of £82bn – 30 per cent fewer than at its peak. And the total number of international and UK companies admitted to Aim each year has been dwindling; 519 companies joined in 2005, compared with just 102 in 2010.

Suspensions also happen as a result of reverse takeovers – although these are only temporary. Two years ago more than 40 companies appeared on the suspension list. Stripping out the companies that have been temporarily suspended while takeovers go through, there were just 24 companies on the list as at 20 April 2011 and this includes both Aim companies and those on the main market (see table below).

If you own shares in a company that has been suspended now is the time to take action. The more information you keep, the easier it will be for you down the line. First of all, find out if there is a potential exit route. Advanced UK Trust and Bede, for example, are returning cash to shareholders. Hephaestus has applied to join Sharemark, a private market. Prime Focus filed its interim accounts and has resumed trading, while Pan Pacific Aggregates is in advanced discussions regarding a potential reverse takeover and, if all goes well, trading will then resume.

If there is no exit route, the shares will be de-listed. As soon as this happens you must contact your local tax office and explain the situation, passing on as much information as you can. HM Revenue and Customs (HMRC) considers Aim companies to be unquoted and does not therefore include them in its list of companies deemed to be of negligible value. However, you can still claim losses made on investments in Aim companies.

If you own shares in a company that went into receivership, no longer has a quote on the stock market and does not appear in the list of companies officially declared to be of negligible value, you may still be able to offset the loss against any capital gains you have made. It could just be that, as HMRC says on its website, "a negligible value claim has not been previously considered". It is important to contact your local tax inspector and explain the situation in full. Your claim will then be transferred to the Shares and Assets Valuation Office if appropriate. If approved, the company's name will then be added to the list. HMRC produces several booklets on the subject of capital gains tax (CGT) and an introduction to the share valuation division (SVD1) and these may be obtained from your local tax office or on its website: www.hmrc.gov.uk.

The negligible value list

In the past it was difficult for investors to track down information on companies declared to be of negligible value by HMRC. We lobbied HMRC to make the list more accessible and, thanks to our efforts, you can now find the complete list of shares of negligible value at www.hmrc.gov.uk. It contains the name of the company, the type of security, and the tax year or specific date at which the shares were accepted as being of negligible value.

HMRC has passed on some helpful comments regarding companies whose shares are deemed to be of negligible value:

■ It is not the company as such that is agreed to be worthless, but specific classes of share or other security issued by the company in question. In principle, you might have one class of share or security in company X that had become worthless when another class of share or security in company X still had value.

General guidance on negligible value claims can be found here.

■ People can make a claim that the asset has become worthless and they are then treated as if they had disposed of the asset and reacquired it at the negligible value. A "negligible value claim" enables the claimant to crystallise a loss on their "worthless" asset at the time of the deemed disposal. The time of the deemed disposal is the time at which the claim is made, but the taxpayer may be able to backdate the time for a couple of tax years depending on the circumstances.

■ There is no set time frame for agreeing that shares (or any other asset) are of negligible value because it depends on someone to choose to make a "negligible value claim". There is no particular "best time" for the taxpayer to make a negligible value claim. As long as a person continues to own the asset and the conditions for a claim are met, they can make a claim. The time at which a loss arises depends on the time when a claim is made and whether it is backdated or not. Individual investors will take into account their personal circumstances when deciding whether and at what time to claim.