Dominic Coyleanswers your questions

Exit directions

I had investments in two unit trusts/investment bonds subject to gross roll-up and exit tax of 23 per cent.

One unit trust was successful over the years but is now declining rapidly. I decided to sell and am liable for a massive exit-tax deduction (€177,000).

The other unit trust was a dead loss and declined more rapidly with a higher loss of capital on exit (€500,000-plus).

Can the capital loss be set off against the gain in the other? If not, under what tax heading (capital gains tax/income tax) can I claim such losses?

Mr C.H., Wicklow

I am glad to note that at least one of your investments paid dividends. In the current climate, it was probably no harm to take your profits.

The gross roll-up regime was introduced in 2002 to allow profits within unit funds to be rolled over year-on-year with the Revenue taxing the profit only when the fund was drawn down. Previously, under the net funds regime, Revenue taxed fund profits annually at the rate of 20 per cent.

In return for allowing the profits to roll over, the exit tax was set at a rate equivalent to the basic rate of income tax plus three percentage points - currently 23 per cent.

However, there is no offset provision. This is not the same as capital gains where the price of a defined asset - art, shares, a property - declines. Equally, it cannot be offset against income tax. Essentially, if you make an investment gain on the fund, it is subject to exit tax. If you make a loss, no such tax applies.

ICI takeover

In your reply to Mr P.D. re the ICI takeover, you said his capital gains tax (CGT) would arise in the first nine months of 2008.

He was vague on the dates. The actual ICI takeover was as at December 19th, 2007, but the payment cheques are dated January 15th, 2008. I assume that the CGT period is therefore 2007 and that any CGT arising was payable by January 31st, 2008 - ie yesterday.

This is not just an academic query as I was an ICI shareholder and am liable to CGT on this takeover.

Mr P. G., Dublin

As you say, it is clearly more than an academic concern. One doesn't want to get on the wrong side of the Revenue on these issues, especially given the penalties that can apply.

The formal court approval for the scheme of arrangement that facilitated the takeover of ICI by Akzo Nobel occurred on December 19th. However, the deal was not formally completed until January 2nd.

In general, the terms of the specific contract determine the relevant date for capital gains. If there are conditions in the contract, then the date of disposal is considered to be the date on which the conditions are fulfilled. Otherwise, it is the date the contract is agreed.

Where that leaves us is slightly unclear. The best indications I have are that the Revenue will view this as a 2008 transaction - meaning that CGT settlement will be due by October 31st next - but, to date, there has been no comprehensive ruling.

Good advice

Recently I received a small bequest and would like to invest it but, after consulting a financial adviser to review the entirety of my finances, my concern is that from past experience it is difficult to identify an adviser who is truly independent and not driven by the commissions paid. Where could I find details of financial advisers and what qualifications or registrations should I seek?

Ms C.F., e-mail

The financial regulator has a list of "registered investment product intermediaries" (ie licensed advisers) on its website: see www.ifsra.ie, under "regulated firms".

You can search by location or product and category. Authorised advisers must be able to advise across the full range of products while multi-agency intermediaries act for some providers. Tied agents act only for one provider.

The regulator, unfortunately, does not say which brokers operate by commission so you will need to ask.

My experience is that you are probably best using word-of-mouth recommendations in this area.

• Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by e-mail to dcoyle@irish-times.ie.

This column is a reader service and is not intended to to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.