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HMRC internal manual

Corporate Finance Manual

Old rules: convertibles pre 2005: example for banking and similar businesses

Tax effect of S92A(4) and (7): exceptions for banking and securities dealing businesses

This guidance applies to periods of account beginning before 1 January 2005

The costs of purchasing shares, including any incidental costs in connection with the purchase for exchange in relation to a convertible security were not restricted where

  • the issuer was a bank, or a business involved in dealing in securities, and
  • the security was issued as part of its ordinary business.

However, the incidental costs of issuing shares in relation to a convertible security were still restricted.

The issuer was not required to use the accruals basis of accounting for amounts brought into account.

The rules in FA96/S92A (3)(b) relating to incidental costs did not apply to a bank, etc. issuing exchangeables.