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.