Qualifying corporate bonds: cost of the new holding
The effect of TCGA 1992 section 116 raises the question of the acquisition cost of the shares and securities which form the new asset. In general the acquisition cost of the new asset will be equal to the market value of the old asset before the relevant transaction, section 116(6).
Section 116(7) & (8) provides specific directions on the treatment of any sum of money received or paid by the taxpayer at the time of the relevant transaction. If the taxpayer receives a sum of money then the cost of the new asset is reduced by the sum of money received. If the taxpayer has to pay money then the acquisition cost of the new asset will be increased by the sum of money paid. See the example in CG53717.
If the taxpayer had acquired QCBs of the same class at different times and in different circumstances it may be necessary to identify which QCBs have been disposed of under the relevant transaction. See CG53727.
It will be necessary for Shares and Assets Valuation (SAV) to agree the market value of any unquoted shares or securities included in the old asset even if the QCBs which make up the new asset are quoted. This follows from TCGA1992 section 116(10)(a) which requires you to compute the gain that would have arisen if the old asset had been disposed of at market value immediately before the relevant transaction. If you have a copy of the sale agreement, and the terms and conditions of the QCB, these should be passed to SAV when you request any valuation of the old asset.