Finance Act 1984

64 Exemption for qualifying corporate bonds

(1) Part I of Schedule 13 to this Act shall have effect for the purpose of—

(a) providing, in relation to qualifying corporate bonds, an exemption from capital gains tax and corporation tax on chargeable gains similar to that provided in relation to gilt-edged securities by Part IV of the [1979 c. 14.] Capital Gains Tax Act 1979 ; and

(b) making corresponding amendments of other enactments.

(2) For the purposes of this section, a " corporate bond " is a security, as defined in section 82(3) (b) of the Capital Gains Tax Act 1979,—

(a) which, from the time of its issue, has been quoted on a recognised stock exchange in the United Kingdom or dealt in on the Unlisted Securities Market or which was issued by a body of which, at the time of the issue, any other share, stock or security was so quoted or dealt in; and

(b) the debt on which represents and has at all times represented a normal commercial loan, as defined in paragraph 1(5) of Schedule 12 to the [1973 c. 51.] Finance Act 1973 ; and

(c) which is expressed in sterling and in respect of which no provision is made for conversion into, or redemption in, a currency other than sterling.

(3) For the purposes of subsection (2)(c) above,—

(a) a security shall not be regarded as expressed in sterling if the amount of sterling falls to be determined by reference to the value at any time of any other currency or asset; and

(b) a provision for redemption in a currency other than sterling but at the rate of exchange prevailing at redemption shall be disregarded.

(4) Subject to subsection (6) below, for the purposes of this section and Schedule 13 to this Act, a corporate bond—

(a) is a " qualifying " corporate bond if it is issued after 13th March 1984 ; and

(b) becomes a " qualifying " corporate bond if, having been issued on or before that date, it is acquired by any person after that date and that acquisition is not as a result of a disposal which is excluded for the purposes of this subsection.

(5) Where a person disposes of a corporate bond which was issued on or before 13th March 1984 and, before the disposal, the bond had not become a qualifying corporate bond, the disposal is excluded for the purposes of subsection (4) above if, by virtue of any enactment,—

(a) the disposal is treated for the purposes of the Capital Gains Tax Act 1979 as one on which neither a gain nor a loss accrues to the person making the disposal; or

(b) the consideration for the disposal is treated for the purposes of that Act as reduced by an amount equal to the held-over gain on that disposal, as defined for the purposes of section 126 of that Act or section 79 of the [1980 c. 48.] Finance Act 1980.

(6) A security which is issued by a member of a group of companies to another member of the same group is not a qualifying corporate bond for the purposes of this section or Schedule 13 to this Act; and references in this subsection to a group of companies or to a member of a group shall be construed in accordance with section 272 of the Taxes Act.

(7) Part II of Schedule 13 to this Act shall have effect in any case where a transaction occurs of such a description that, apart from the provisions of that Schedule,—

(a) sections 78 to 81 of the [1979 c. 14.] Capital Gains Tax Act 1979 would apply by virtue of any provision of Chapter II of Part IV of that Act; and

(b) either the original shares would consist of or include a qualifying corporate bond and the new holding would not, or the original shares would not and the new holding would consist of or include such a bond ;

and in paragraph (b) above " the original shares " and " the new holding " have the same meaning as they have for the purposes of the said sections 78 to 81.

(8) For the purposes of this section, in any case where—

(a) a security is comprised in a letter of allotment or similar instrument, and

(b) the right to the security thereby conferred remains provisional until accepted,

the security shall not be treated as issued until there has been acceptance.