CG53480 | Debts not debts on a security: subsequent creditor

Once a debt has been assigned to some other person - by way of sale, or other transfer - a gain on a disposal of the debt by that person, or any subsequent holder of the debt, will be a chargeable gain.

Losses

TCGA92/S251 (4)

A loss on a disposal of the debt will be allowable, unless

• the person making the disposal is connected with the original creditor, and

• the person making the disposal acquired the debt either directly from the original creditor, or as a result of a series of transactions between people who were all connected with the person making the disposal. For instructions on connected persons see CG14580+.

Companies

FA93 introduced a new rule for the treatment of foreign exchange gains and losses (FOREX) for companies. For accounting periods beginning on or after 23 March 1995, simple debt denominated in foreign currency within the FOREX regime was no longer liable to chargeable gains, see CG44000.

This rule was however repealed by FA96 on the introduction of more general changes to the taxation of debts held by companies with effect from 1 April 1996. From this date, debts within FOREX were excluded from capital gains by the more general rules for loan relationships of companies, see CG54000+.