CG53431 | Debt on security: when conditions satisfied

You should consider whether any debt amounts to the debt on a security by reference to the circumstances prevailing at the time the debt was created. For example, you should consider whether a rate of interest is commercial by reference to the market conditions at the time the debt was created. Thus, you may take into account any market opinion, at the time the debt was created, as to the likely future changes in the market rate of interest. Changes in the rate of interest which were not anticipated at the time the debt was created cannot be taken into account.

Changes in terms

You should not accept that a debt can be regarded as the debt on a security because the terms of the loan could have been amended to make the debt marketable. If the terms of the debt have changed this cannot affect the status and tax treatment of the debt prior to the changes. You may, however, need to consider whether or not the changes had the effect of bringing to an end the original debt, and creating a new one, to which a different tax treatment may apply.