Reversing the FTT, the UT has decided that particular provisions for loan notes to be converted into euros in the event that the UK adopts the euro do prevent them from being qualifying corporate bonds (QCB). Accordingly, these loan notes are not exempt from capital gains tax. In the context of entrepreneurs’ relief, and given how unlikely it is that the UK will adopt the euro in the near future, this is of limited significance. However, the case includes some interesting comments on the application of the Ramsay principle, particularly its application to closely articulated or prescriptive legislation.
