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Cashing in

15 February 2011
Issue: 4292 / Categories: Forum & Feedback , Business , Income Tax
A client sold his business in 2009/10 for cash and non-qualifying corporate bonds

 We were recently appointed to act for a client who sold his business in 2009/10 for cash and non-qualifying corporate bonds.

I understand that he can elect to be taxed on the full amount in 2009/10 in order to benefit from entrepreneurs’ relief but I can’t find two vital pieces of information.

First what date must our client make the election by?
Secondly where does he stand if he makes the election and the buyer defaults on the loan notes?
The normal rules are that qualifying corporate bonds (QCBs) don’t get bad debt relief while non-QCBs do (because they are treated the same as share exchanges and he only pays tax when he cashes them in).
However if he makes the election in order to get the entrepreneurs’ relief (i.e. to make the nature of the loan more like a QCB for...

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