Deferred consideration, loan notes and QCBs

Shareholders selling for deferred consideration in the form of loan notes historically may have taken Qualifying Corporate Bonds (QCBs) or non-QCBs – two similar forms of loan notes but with a technical, and often artificial, difference: a loan note capable of being redeemed in a foreign currency is likely be a non-QCB, one redeemable only in sterling is likely to be a QCB. The battle between these two formats, in terms of their attractiveness to individuals as consideration for share disposals, has ebbed and flowed over recent years. For many years, non-QCBs were widely perceived as having the edge, as they allowed the taper relief clock to keep ticking. Since the repeal of taper relief and the introduction of entrepreneurs’ relief, QCBs have made a comeback. But do the legislative changes contained in the F(No 2)A 2010 signal the demise of the QCB?