RAILTRACK shareholders should start planning on how to use their losses to reduce their tax bill, advise accountants.

It is possible "but unlikely" that shareholders will receive nothing from their Railtrack shares, warns Tenon tax director Nick Parker.

"If you own Railtrack shares then it is very likely that, one way or another, you will realise a capital loss on these shares."

Two questions arise regarding the capital gains tax position of Railtrack shareholders.

The first question is how any capital loss on Railtrack shares would be realised.

If shareholders were to receive nothing from their Railtrack shares, the Inland Revenue would include Railtrack shares in their published list of quoted shares which have become of negligible value.

"At this point a shareholder could make a 'negligible value claim' for tax purposes, to the effect that they have sold the shares for nothing, thus triggering a capital loss equivalent to the cost of the shares," said Mr Parker.

The second question concerns how can any capital loss on Railtrack shares could be used.

If a shareholder owned 3,000 Railtrack shares purchased for £10,800, and they received £3,000 from the shares at the end of the day, then the shareholder would have realised the capital loss of £7,800.

This can be used against capital gains made in the same year. If this is the case you have to offset the losses against the gains before utilising your annual capital gains tax exemption.

If the loss is not used in the same year then it can be carried forward indefinitely for relief in future years.