QCB - provision for payment in non-GBP *but at prevailing FX rate at time*

Hi, First - thank you for this excellent forum of knowledge. This is my first question. I believe that QCBs must be expressed in and redeemed in sterling. I note section 117(2): (a)a security shall not be regarded as expressed in sterling if the amount of sterling falls to be determined by reference to the value at any time of any other currency or asset; and (b)a provision for redemption in a currency other than sterling but at the rate of exchange prevailing at redemption shall be disregarded. Your guidance here (https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg53706) states: "Section 117(2)(a) is intended to prevent a potential loss of tax on any exchange gain or loss on a disposal or redemption of the security. On the other hand, some issues of securities - and this applies in particular to some old Eurobond issues - may provide for the amount on redemption, although based on a sterling value, to be repayable in a currency other than sterling at the exchange rate prevailing at the time of redemption. The terms of the security may permit, for example, repayment of an amount of foreign currency computed by reference to a sterling figure using the exchange rate applying at or shortly before the due date for redemption. As a company may need a short time to acquire the necessary foreign currency before the due date, HMRC accepts that a rate of exchange up to ten business days before the due date for redemption can be the rate “prevailing at redemption”. In such cases the possibility of an exchange gain (or loss) is severely restricted." If a bonds terms includes wordings such as: If the Issuer determines that the amount payable on the respective Payment Business Day is not available to it in such freely negotiable and convertible funds for reasons beyond its control or that the Specified Currency or any successor currency to it provided for by law (the "Successor Currency") is no longer used for the settlement of international financial transactions, the Issuer may fulfil its payment obligations by making such payment in Euro on, or as soon as reasonably practicable after, the respective Payment Business Day on the basis of the Applicable Exchange Rate. Holders shall not be entitled to further interest or any other payment as a result thereof. The "Applicable Exchange Rate" shall be, (i) if available, the Euro foreign exchange reference rate for the Specified Currency or the Successor Currency determined and published by the European Central Bank for the most recent practicable date falling within a reasonable period..." Then can I assume that *in terms of the currency aspect of QCBs* that this is not ineligible? In layman's terms, it will pay effectively a sterling-equivalent amount, though not delivered in sterling. Many thanks for any help!!

Name removed admin .

Hi Ian Kelly,
To confirm you are correct. 
Thank you.