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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Qualifying corporate bonds: transitional: debts: company reorganisation

FA96/SCH15/PARA30 (2)

Where the conditions in CG54240 are met, TCGA92/S116 has effect as if there had been a transaction, on 5 April 1996, by which the person holding the debt had

  • disposed of it, and
  • immediately reacquired it as a QCB.

The rules in TCGA92/116 (10) require that any gain or loss is computed on the basis that the asset had been sold for a consideration equal to its market value at that date. This gain or loss is then postponed, and crystallises when there is a disposal of the QCB. For further details of the operation of TCGA92/S116, see CG53709+.

Any gain or loss on the debt up to 5 April 1996 will, therefore, come into charge on a disposal of the relevant discounted security. Disposal includes redemption, TCGA92/S251 (2).