Lost asset or disposed asset?

Tax question, note I’m based in the UK.

I owned some UMB token which was delisted off the KuCoin exchange. Unfortunately, I didn’t withdraw the token in time as per warning on this page (point 4): Crypto Exchange | Bitcoin Exchange | Bitcoin Trading | KuCoin

" 4.If you are currently holding the relevant tokens, please make your withdrawal on or before the closing date above. If you did not withdraw the funds within the specified time period, you are deemed to have given up the funds and will have no rights to claim back the funds or any other equal valued products from KuCoin."

So my question is, would this count as

  1. a lost asset in which case I can’t offset the loss against my capital gains tax total
  2. a disposal meaning I can offset the loss against my capital gains tax total

Some guidance would be appreciated.

Hi @pc88,

If I were in your position I would be inclined to take the position that the “deemed” surrender of your rights to the tokens constitutes a disposition of the tokens for tax purposes and produces a capital loss that can be offset against any capital gains.

I would try to avoid characterizing the tokens as “lost assets” because HMRC takes the position that lost crypto is not considered a disposal for Capital Gains Tax purposes as the asset still exists. This leaves you having to make a “negligible value claim” where you would have to prove to HMRC there is no chance of recovering your tokens. If this negligible value claim is successful, you would later be able to claim your “lost” tokens as a capital loss.

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