In Anthony and Tracy Hancock v HMRC (TC03816 – 21 July 2014) the FTT found that an avoidance scheme involving the conversion of non-qualifying corporate bonds (QCBs) into QCBs following a reorganisation ‘worked’.
Mr and Mrs Hancock had sold ordinary shares and received loan notes as consideration. As the loan notes could be redeemed in dollars at an exchange rate other than that prevailing at the time of redemption they were not QCBs for the purposes of TCGA 1992 s 117.
A deed of variation subsequently removed the right to redeem the loan notes in dollars. The loan notes were then exchanged for secured discounted loan notes which were QCBs and which were redeemed in June 2003. The issue was the CGT arising on redemption.
Under TCGA 1992 s 127 the disposal of shares and the acquisition of the loan notes as part of a ‘reorganisation’ does...
