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Where Taxpayers and Advisers Meet

Worthless QCBs

Brightonian
Posts: 112
Joined: Wed Aug 06, 2008 3:31 pm

Worthless QCBs

Postby Brightonian » Wed Oct 26, 2016 2:52 pm

My client sold his interest in a company in 2014/15 for a combination of upfront cash and deferred loan notes (QCBs). He is aware that he can make an election by 31 January 2017 to have the entire gain subject to Entrepreneurs Relief. However, it now seems that the company cannot redeem any more loan notes. If he makes the election, the entire gain will be taxed at 20%. If he does not make the election, it would seem that he will be taxed on the entire gain at 20%. However, I have read that, by concession, HMRC will not pursue the gain on the unredeemed loan notes if the worthless QCB is donated to charity. However, I cannot find this concession mentioned on HMRC's website and am worried about relying on it. Does anyone know anything about this matter please?

LozaACCS
Posts: 1504
Joined: Wed Aug 06, 2008 3:55 pm

Re: Worthless QCBs

Postby LozaACCS » Wed Oct 26, 2016 8:08 pm

Your view is correct, see HMRC CG manual 66624 and TCGA 1992 S 257

Brightonian
Posts: 112
Joined: Wed Aug 06, 2008 3:31 pm

Re: Worthless QCBs

Postby Brightonian » Thu Oct 27, 2016 9:08 am

Thank you for confirming this.


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