Chargeable gains on shares that had been ‘frozen’ into loan notes did not escape capital gains tax when the loan notes were converted into other loan notes which were qualifying corporate bonds.

Summary

Chargeable gains on shares that had been ‘frozen’ into loan notes did not escape capital gains tax (CGT) when the loan notes were converted into other loan notes, which were qualifying corporate bonds (QCBs) (which are subject to exemption under TCGA 1992, s 115).

Background

The appellants held between them 100% of the shares in a company (B). In August 2000, B was sold to another company (L) in three stages. The initial consideration was loan notes issued by L (the ‘08/00 loan notes’), which were non-QCBs with provision for additional