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Trigg v HMRC – Court of Appeal decision

Trigg v HMRC – Court of Appeal decision

Provisions allowing bonds to be redenominated to euros if the UK changed its lawful currency do not prevent bonds from being QCBs.


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The Court of Appeal has allowed the taxpayer’s appeal against a decision of the Upper Tribunal in this case concerning qualifying corporate bonds (QCBs). The taxpayer had argued that certain provisions in sterling bond instruments, which provided for the bonds to be redenominated to euros (or another currency) in the event that the UK adopted the euro (or another currency) as its lawful currency, did not prevent the bonds from being QCBs and therefore exempt from CGT. 

The Court agreed with HMRC that the legislation was a ‘statutory construct’ and that a purposive construction was therefore not possible. However, they went on to find that, as the conversion provisions in the bonds are only designed to operate after there is a change in the lawful currency of the UK from sterling to another currency, they are not the type of "provision […] made for conversion" into another currency that the CGT legislation is aimed at, as the conversion will not allow for a foreign exchange gain or loss to be made.

It should be noted that nothing in this case should change the non-QCB tax treatment of loan notes that include an appropriately drafted foreign currency redemption clause.

It remains to be seen if HMRC will appeal this decision. The relative volatility of this appeal which was allowed by the First-tier Tribunal, then rejected by the Upper Tribunal, then allowed once more by the Court of Appeal, could suggest that another HMRC appeal may yet be in the offing. 

Fore more information please contact:

Paul Harden

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