Readers' forum: Loan note

My client is trying to sell his company. The present purchaser is unable to raise the substantial funds required from financial institutions and the consideration will therefore be satisfied by the issue of qualifying corporate bonds (QCBs).

My understanding is that a loan note such as one containing the right of repayment in a foreign currency before redemption would meet the requirement to make it a non-qualifying QCB. The motivation for this is the possible availability of bad debt relief should the purchaser be unable to redeem the loan note out of future cash flow of the target company. However the vendors clearly would like to bank their entrepreneurs’ relief by making a TCGA 1992 s 169Q election. Therefore they will have crystallised the gain at the date of sale.

My query is what happens if this loan note is subsequently found to be redeemed for...