There is much speculation as to the future of An Post, which prompts me to ask just how good is the State guarantee? Is it the amount of the investment only that is guaranteed?

An Post

If one invested say €10,000 and that sum grew to €15,000, would one receive the value of the savings certificates or just the original €10,000 investment?

Mr P.D., Dublin

An Post may have its problems just now but the integrity of the State guarantee is not one of them. The guarantee is the one thing that sets An Post apart from other investment opportunities and it makes it particularly attractive to investors who are not comfortable with risk.

If you take up a product with a guarantee from a private institution - take Equitable Life for instance - you can find yourself fighting to force its delivery if things get tough for the company. What you are buying with An Post is that the State, with all its financial security, is backing the promises made on your investment.

The payoff for such a gold-plated guarantee is that returns are pitched at the lower end of expectations.

In the example you give, the guarantee covers both the capital initially invested and the promised return.

The company's current travails in no way affect this guarantee. The only two things that could impact on the commitment would be if the State found itself to be a financial basket case of similar proportions to its postal service - and we are a long way from that in these post-Tiger days - or if the postal service was privatised and the State no longer held a role. Even then, existing guarantees on products already sold under its tenure would have to be honoured.

You need not worry. The savings certificates are probably the safest things in An Post.

Lamont shares

In late 1999, I bought 20,000 shares at 28p (sterling) in Lamont Holdings, the Belfast-based textile company. The shares, which were quoted in London, did not perform very well. Then recently, when reviewing my share portfolio, I checked to see the latest price to find that they had been delisted and I was told by my broker that the firm had gone into liquidation.

I found this strange, as no correspondence had ever been received about this from either the company or the liquidator.

Can you clarify the position of this investment - I am assuming it is a total write-off. When did the shares cease to exist and how do I treat it in my tax returns? With indexation, what is the tax loss involved?

Finally, having had some real dodos in the past few years - Baltimore, Waterford Wedgwood, etc - can one carry forward losses from one tax year to another or can they only be used in the year they occur?

Mr D.B., Dublin

Shares in Lamont were suspended on February 6th, 2003, just ahead of the company going into receivership. The company cancelled its listing on London's Alternative Investment Market on March 26th of that year. At the time, they were trading at 62.5p, well down on the £3.25 level they hit in May 2002.

Unfortunately, from your perspective, that means that you are holding onto worthless stock. In a receivership, shareholders come pretty much at the bottom of the pile of creditors looking for what they are owed from a company.

The fact that you were not personally notified is not necessarily an issue. It is quite common in receiverships for such information to be transmitted via official announcements in the media - in part to reduce the costs involved and avoid eating further into the limited assets of a troubled company.

Your tax loss is effectively your investment in the shares - £5,600 - and that is a loss that can be set against any other capital gain you might have.

It has to be said that you have had either bad luck or poor advice when you look at some of the companies you list in your portfolio. The only vaguely positive news from your point of view is that you can carry forward any losses incurred in share dealings to offset against future gains.

There is no time limit on this. The losses continue to be allowable until they are completely offset. However, indexation does not apply in relation to investment losses only gains - and then only up to the end of 2002.

First Active

I got free shares from the First Active demutualisation. I cashed them in December 2002 but have not let the Revenue know as I expected that the building society would notify them. What kind of penalties can I expect to pay? Is it possible that the Revenue will ask all the building societies, at some stage, for full details of who benefited from free share allocations and when they cashed them in?

Mr A.N., Galway

The most important thing is that the building society is not the party responsible for notifying Revenue of your liability - you are. The penalties for not doing so can be onerous and certainly enough to wipe out any profit you may have made on the transaction.

It is a common failing of the novice investor - typically those who received free shares when a mutually owned company transferred to public ownership and a stock market listing.

As members of a mutual, people like yourself were used to being informed regularly by the body of which you were a member what was going on and what decision needed to make.

Once you became a shareholder of a listed company, this relationship changes totally. You are simply an investor. The company undertakes to provide information to you and the rest of the market at the same time in accordance with carefully framed statutes. It also grants you the right of attendance and voting at annual and extraordinary general meetings. But it does not hold your hand.

Once you sell your shares in the company, the responsibility to settle any liabilities with the Revenue is yours. The same applies on dividends. The company is forced by the State to withhold tax at the basic rate but shareholders paying tax at the higher rate must declare the income on their annual return.

You should note that the Revenue sent letters to each shareholder on the register at the time of the takeover by Royal Bank of Scotland reminding them of their liability and the settlement dates involved. This was the first time it had undertaken such an exercise but it illustrates the access Revenue has to the share registers of listed companies.

So will they find you? Yes, if they consider the likely return from such an exercise to be worthwhile.

And the penalties? You can expect to have to pay the tax outstanding. In addition, you will face a surcharge of 10 per cent of that amount up to a maximum of €53,485. There will also be interest to pay. This is charged at the daily rate of 0.0322 per cent on the amount outstanding - an annual rate of around 11.75 per cent. And that is if you approach the Revenue to settle. If they get you, you could face prosecution.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. No personal correspondence will be entered into.