Deferred consideration – the problem with loan notes
Looking at a recent query, I thought a quick reminder on this may be useful. The problem we had was that a company had bought shares in another company with part of the price being in the form of an issue of standard loan notes (in tax tech speak - qualifying corporate bonds (QCBs)). HMRC clearance was obtained such that the gain was deferred until the QCBs were redeemed or disposed of, when the capital gains tax would be due. The business has not done well and is being closed down. None of the QCBs have been redeemed. Can the loan notes be released?
This would not be good. If the loan notes fall in value, no loss relief is available, but any deferred gain still comes into charge on disposal. A disposal includes a release at undervalue.
So, the people holding the QCBs would have a tax bill for receiving loan notes that are worth nothing.
Date: 18th February, 2013
Articles from this Author
1st November, 2018
Budget 2018 - Changes for businesses
22nd October, 2018
Making the most out of your home? Rent a room relief
3rd May, 2018
Tax changes for non-resident corporate landlords
4th April, 2018
EMI options - a current risk
Contact Business Service Partners
Choose from the drop down menu below to select a Partner to contact.
Sandy Bell, Partner in Rickmansworth considers the merits of Furnished Holiday Lettings in Optima magazine… twitter.com/i/web/status/1…
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole