D6.112 Reorganisations Involving Qualifying Corporate Bonds—Further Provisions

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Commentary

Corporate tax

New holding consists only partly of QCBs

To avoid any potential abuse of the QCB regime, special provisions apply if the new holding on a reorganisation consists only partly of QCBs. Where this is the case, the base cost of the original shares is apportioned (on a just and reasonable basis¹) between the new shares and the QCBs according to their respective market values at the time of the exchange.

The proportion of the gain attributable to the QCBs is deferred and will crystallise on the subsequent disposal of the bonds in the usual manner².

if cash is received in addition to the QCBs and there is a notional 'frozen' gain³, a proportion of the gain will crystallise immediately. That proportion is the

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