CFM9361 - Taxing forex: bringing into account: shares exchanged for QCB

Disposals within TCGA92/S116(10)

Where there is an exchange of shares for an asset that is a qualifying corporate bond (QCB) TCGA92/S116 (10) deems there to be no disposal (see CG53822+).

REG9, SI2002/1970applies instead so that the amount that would have been brought into charge under Reg 4 ( CFM9346) is added to the market value of the bond for the purposes of the calculation in S116(10). If the amount that would have been brought into charge

• is an exchange gain, it is added to the market value,
• is an exchange loss, it is deducted from the market value, and
• if the net loss is greater than the market value of the bond the excess is treated as a chargeable loss accruing to the company on disposal of the bond.

The amount is therefore brought into charge on a subsequent disposal of the QCB. S116 (10)(c) ensures that the exemption for chargeable gains on qualifying corporate bonds in TCGA92/S115 does not extend to chargeable amounts in S116 (10).

See CFM9361a for an example of how Reg 9 works.