The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
On the disposal of the shares in a company, a seller may receive loan stock in the acquiring company as consideration or part consideration for the sale. For tax purposes, loan notes are either QCBs or non-QCBs.
The way in which the loan notes are treated for tax purposes depends on whether the loan notes are classified as QCBs or non-QCBs. HMRC needs to be satisfied that the issue of the loan note is not for the purposes of tax avoidance. Therefore, it is always advisable to seek clearance from HMRC under TCGA 1992, s 138 when entering into a transaction involving loan notes. For more information on this, see the Paper for paper treatment clearances guidance note. Much of the commentary below relates to the tax position of the individual investor rather than the company; however, it is important for company directors and their advisers to understand the tax implications for investors when structuring transactions, and to encourage the individuals involved to obtain their own tax advice.
For loan stock to meet the definition of a QCB, it must satisfy three conditions:
TCGA 1992, s 117
A provision which provides for sterling bonds to be redenominated in the euro or another currency in the event that the UK adopted the euro or another currency as its lawful currency does not of itself prevent the bonds from being QCBs ― see Nicholas Trigg v HMRC [2018] EWCA Civ 17 (subscription sensitive). It is not yet known if HMRC will appeal this decision.
QCBs are attractive for individuals as
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