Bonds that contained a provision for currency conversion to euros were prevented from being qualifying corporate bonds for capital gains tax purposes.
One of the bond clauses (‘Schedule A’) referred to the euro in its heading, and dealt with a prospective change of currency in the UK. It broadly provided for conversion into the new UK currency for the purposes of obligations and payments under the bond. The other clause (‘Schedule B’) would come into effect if the UK became an EU member state which adopted the euro as its currency. It enabled the bond’s issuer to give notice that the bond be deemed to be re-denominated in euros.
HM Revenue and Customs considered that the relevant clauses meant that the bonds were not entitled to exemption as QCBs by virtue of TCGA 1992, s 117(1)(b), which provides that a QCB is one: “which is expressed in sterling and in respect of which no
