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W Blumenthal v HMRC

In W Blumenthal v HMRC (TC02174 – 22 August) an individual (B) exchanged some shares for some loan notes in a public company following a company reorganisation in 1999. In February 2004 B entered into two deeds of variation with the company which had issued the loan notes removing an option to redeem them in a foreign currency and thus converting them into qualifying corporate bonds. In March 2004 B redeemed the notes for a total of £328 860. In his 2003/04 tax return he claimed that he had made a capital loss on the redemption computed on the basis that the loan notes had a value of £9 866 at the time of their conversion in February 2004. Following an enquiry HMRC formed the opinion that the redemption had given rise to a capital gain and issued a CGT assessment.


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