EXPLANATORY NOTE

Clause 60 is purely consequential upon Clause 59. It deals with the case where a security which was not previously a qualifying corporate bond (QCB) becomes a QCB by virtue of Clause 59. The clause ensures that the appropriate capital gains tax treatment will follow, particularly where such a bond was previously acquired in exchange for other assets on a reorganisation.

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Clause 60 is consequential upon clause 59 and deals with some capital gains consequences of the changes made by clause 59 to the definition of RDS.

Subsection 1 sets out the conditions necessary for the section to apply. There has to have been a transaction

before 15 February 1999 (the date from which the provisions in section 60 generally have effect)

where there was an exchange, conversion or other transaction which in accordance with the provisions of the Taxation of Chargeable Gains Act 1992 was treated for tax purposes as not involving a disposal of one asset and the acquisition of another but which treated the new asset as if it was the old asset with the same cost and date of acquisition.

where the new holding after that transaction was or included a security which becomes a RDS as a result of section 59 and which was not one before 15 February 1999.

Subsection 2 provides that where there is an asset that falls within subsection 1, there is deemed to be a further transaction involving an exchange or conversion but one where the tax treatment that follows is that given to exchanges or conversions where the new asset is a qualifying corporate bond. The time of the deemed transaction is given by subsection 3 and depends on whether the transaction described in subsection 1 took place before 5 April 1996, or on or after that date.

The effect of the subsection is that any gain that would have accrued at the date of this deemed transaction is calculated but then held over and only brought into charge to tax when the security is finally disposed of. This section makes sure that any accruing gain on the asset before it became a RDS as a result of section 59 is ultimately brought into charge to tax at the appropriate time

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