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Huge tax bills for Royal Dutch investors from Shell merger

Daily Telegraph: Huge tax bills for Royal Dutch investors from Shell merger 


By Paul Farrow (Filed: 31/05/2005)


Hundreds of British shareholders in Royal Dutch Petroleum face huge capital gains tax bills when it merges with Shell Transport & Trading.


Last week, the oil giant announced the timetable for this deal. If, as expected, the proposals are accepted, investors will exchange existing shares for shares in the new company on July 20.


The vast majority of shareholders will not have to pay any tax when the shares are exchanged. British Shell Transport & Trading shareholders qualify for rollover relief and will only be liable for CGT as and when they dispose of their shares in future.


However, it has emerged in the small print that about 2,000 British investors who own Royal Dutch shares do not qualify for roll-over tax relief. Many of these investors will be liable for capital gains tax of up to 40 per cent when their existing shares are replaced by a stake in the new company.


Rathbones, the stockbroker, said that it has several clients with capital gains of more than £100,000, as they have held the shares for more than 20 years.


The Association of Private Client Investment Managers and Stockbrokers (Apcims) is in urgent talks with Royal Dutch Shell to resolve the matter. It has also written to the Inland Revenue and the Treasury asking for help.


Angela Knight, the chief executive of Apcims, said: “Shell really knows how to hit the elderly. Most Royal Dutch shareholders have held the shares for years. They deserve to be treated the same as the other shareholders, otherwise people will have to pay a fortune in tax.”


Sir David Howard, the chairman of Charles Stanley, the stockbroker, said that more than 100 of his firm’s clients were affected. He added: “I’m not sure Shell spotted the problem.”


Shell said there were many ways in which individuals could reduce any tax payment on acceptance of the offer.

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