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Hancock and Hancock v CRC, Upper Tribunal (Tax and Chancery Chamber), 23 February 2016
Capital gains tax due on conversion of qualifying corporate bonds and non-qualifying corporate bonds
The taxpayers were a married couple who held all the share capital in a limited company BL. In August 2000 they sold BL to LH and received loan notes as consideration. The notes were repayable on 24 August 2004 or earlier and could be redeemed in US dollars with the exchange rate to be the spot rate 20 days before repayment. It was agreed that these provisions prevented the notes being qualifying corporate bonds (QCBs) for the purposes of TCGA 1992 s 117.
The couple received additional loan notes in 2001. A deed of variation removed the right to redemption in US dollars from the 2001 notes as a result of which they became QCBs.
On 7 May 2003 the couple exchanged both sets of loan notes for two secured...
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