|
| |
|
(6) | Subsection (7) applies in calculating the sale price for the purposes of this |
| |
section if the repo involves the exercise of an option (see section 569(4)(b) and |
| |
| |
(7) | The amount of any consideration given for the option is— |
| |
(a) | in a case falling within section 569(4)(b), added to what would |
| 5 |
otherwise be the price, and |
| |
(b) | in a case falling within section 569(4)(c), subtracted from what would |
| |
| |
(8) | This section is subject to section 608 (exceptions) and Chapter 6 (powers to |
| |
modify repo provisions: non-standard repo cases and redemption |
| 10 |
| |
608 | Exceptions to section 607 |
| |
(1) | Section 607 does not apply in a case within subsection (2) or (3). |
| |
(2) | A case is within this subsection if the agreement or agreements for sale and |
| |
repurchase are not what one would expect of persons dealing at arm’s length. |
| 15 |
(3) | A case is within this subsection if the interim holder has all the benefits and |
| |
risks from fluctuations in the market value of the securities between their sale |
| |
| |
(4) | This section is subject to any regulations under— |
| |
(a) | section 611 (power to modify Chapter 5 in non-arm’s length case), and |
| 20 |
(b) | sections 612 to 614 (powers to modify repo provisions: non-standard |
| |
repo cases and redemption arrangements). |
| |
| |
609 | Additional income tax consequences of price differences |
| |
(1) | Subsections (2) and (3) apply if an amount is treated under section 607 as a |
| 25 |
| |
(2) | If the repurchase price is more than the sale price, the repurchase price is |
| |
treated for other income tax purposes as reduced by the amount of the |
| |
| |
(3) | If the sale price is more than the repurchase price, the repurchase price is |
| 30 |
treated for other income tax purposes as increased by the amount of the |
| |
| |
(4) | “Other income tax purposes” means income tax purposes other than the |
| |
| |
(a) | sections 601 to 605 (deemed manufactured payments: repos), and |
| 35 |
| |
(5) | The Treasury may by regulations provide for any amount which is treated |
| |
under section 607 as received as a payment of interest to be treated, in such |
| |
circumstances and so far as may be described in the regulations, as exempt |
| |
| 40 |
|
| |
|
| |
|
(6) | “Exempt pension income” means income which is eligible for relief from |
| |
income tax as a result of section 613(4) or 614(2), (3) or (4) of ICTA or section |
| |
186 of FA 2004 (exemptions about pensions and annuities). |
| |
(7) | Section 261G of TCGA 1992 deals with the effect on the repurchase price for |
| |
capital gains tax purposes of an amount being treated under section 607 as a |
| 5 |
| |
| |
610 | Repurchase price in deemed manufactured payment case |
| |
(1) | This section applies if section 602 (deemed manufactured payments: repos) |
| |
applies to a case in which section 607 applies. |
| 10 |
(2) | References in sections 607 to 609 to the repurchase price are to be read as |
| |
references to the repurchase price which is applicable as a result of section |
| |
| |
| |
611 | Power to modify Chapter in non-arm’s length case |
| 15 |
(1) | The Treasury may by regulations provide for— |
| |
(a) | sections 607 to 610 (price differences under repos), or |
| |
(b) | any of those sections, |
| |
| to apply with modifications if the exception in section 608(2) (agreement not at |
| |
arm’s length) would otherwise prevent section 607 from applying. |
| 20 |
(2) | Regulations under this section may make different provision for different |
| |
| |
(3) | Regulations under this section may contain incidental, supplemental, |
| |
consequential and transitional provision and savings. |
| |
(4) | The incidental, supplemental and consequential provision may include |
| 25 |
| |
(a) | section 604 (deemed increase in repurchase price: price differences |
| |
| |
(b) | section 605 (deemed increase in repurchase price: other income tax |
| |
| 30 |
(5) | In this section “modifications” includes exceptions and omissions. |
| |
(6) | Accordingly, the power in subsection (1) includes power to provide for any of |
| |
sections 607 to 610 not to apply in relation to the case mentioned in that |
| |
| |
| 35 |
Powers to modify repo provisions |
| |
612 | Non-standard repo cases |
| |
(1) | The Treasury may by regulations provide for— |
| |
|
| |
|
| |
|
(a) | sections 601 to 606 (deemed manufactured payments: repos), |
| |
(b) | sections 607 to 610 (treatment of price differences under repos), or |
| |
(c) | any of those sections, |
| |
| to apply with modifications in relation to non-standard repo cases. |
| |
(2) | A case is a non-standard repo case if— |
| 5 |
(a) | there is a repo in respect of securities, |
| |
(b) | under the repo, there has been a sale (“the original sale”) of the |
| |
securities by the original owner to the interim holder, and |
| |
(c) | any of conditions A to E is met in relation to the repo. |
| |
| 10 |
(a) | the obligation to buy back the securities is not performed, or |
| |
(b) | the option to buy them back is not exercised. |
| |
(4) | Condition B is that provision is made by or under an agreement for different or |
| |
additional UK shares, UK securities or overseas securities to be treated as (or |
| |
as included with) representative securities. |
| 15 |
(5) | Condition C is that provision is made by or under an agreement for any UK |
| |
shares, UK securities or overseas securities to be treated as not included with |
| |
representative securities. |
| |
(6) | Condition D is that provision is made by or under an agreement for the sale |
| |
price or repurchase price to be decided or varied wholly or partly by reference |
| 20 |
to post-agreement fluctuations. |
| |
(7) | Condition E is that provision is made by or under an agreement for a person to |
| |
be required, in a case where there are post-agreement fluctuations, to make a |
| |
| |
(a) | beginning immediately after the making of the agreement for the |
| 25 |
| |
(b) | ending when the repurchase price becomes due. |
| |
(8) | “Post-agreement fluctuations” are fluctuations in the value of — |
| |
(a) | securities transferred in pursuance of the original sale, or |
| |
(b) | representative securities, |
| 30 |
| which occur in the period after the making of the agreement for the original |
| |
| |
(9) | “Representative securities” are UK shares, UK securities or overseas securities |
| |
which, for the purposes of the repurchase, are to represent securities |
| |
transferred in pursuance of the original sale. |
| 35 |
613 | Redemption arrangements |
| |
(1) | The Treasury may by regulations provide for— |
| |
(a) | sections 601 to 606 (deemed manufactured payments: repos), |
| |
(b) | sections 607 to 610 (treatment of price differences under repos), or |
| |
(c) | any of those sections, |
| 40 |
| to apply with modifications in relation to cases involving redemption |
| |
| |
(2) | A case involves redemption arrangements if— |
| |
|
| |
|
| |
|
(a) | arrangements, corresponding to those made in cases where there is a |
| |
repo, are made by an agreement, or one or more related agreements, in |
| |
relation to securities that are to be redeemed in the period after their |
| |
| |
(b) | the securities are UK shares, UK securities or overseas securities, and |
| 5 |
(c) | the arrangements are such that the seller or a person connected with the |
| |
seller (instead of being required to repurchase the securities or |
| |
acquiring an option to do so) is granted rights in respect of the benefits |
| |
that will result from the redemption. |
| |
614 | Sections 612 and 613: supplementary |
| 10 |
(1) | Regulations under section 612 or 613 may make different provision for |
| |
| |
(2) | Regulations under either section may contain incidental, supplemental, |
| |
consequential and transitional provision and savings. |
| |
(3) | The incidental, supplemental and consequential provision may, in the case of |
| 15 |
regulations about sections 607 to 610, include modifications of— |
| |
(a) | section 604 (deemed increase in repurchase price: price differences |
| |
| |
(b) | section 605 (deemed increase in repurchase price: other income tax |
| |
| 20 |
(4) | In this section and sections 612 and 613 “modifications” includes exceptions |
| |
| |
(5) | Accordingly, a power in sections 612 and 613 to provide for a provision to |
| |
apply with modifications in relation to a particular case includes power to |
| |
provide for the provision not to apply in relation to that case. |
| 25 |
| |
| |
| |
Transactions in securities |
| |
| 30 |
| |
(1) | This Chapter makes provision for counteracting income tax advantages |
| |
obtained or obtainable by persons to whom section 617 applies in respect of a |
| |
transaction or transactions in securities. |
| |
(2) | See section 631 (counteraction notices) for the way in which the income tax |
| 35 |
advantages may be counteracted. |
| |
616 | Meaning of “income tax advantage” |
| |
(1) | In this Chapter “income tax advantage” means— |
| |
(a) | a relief from income tax or increased relief from income tax, |
| |
|
| |
|
| |
|
(b) | a repayment of income tax or increased repayment of income tax, |
| |
(c) | the avoidance or reduction of a charge to income tax or an assessment |
| |
| |
(d) | the avoidance of a possible assessment to income tax. |
| |
(2) | For the purposes of subsection (1)(c) and (d) it does not matter whether the |
| 5 |
avoidance or reduction is effected— |
| |
(a) | by receipts accruing in such a way that the recipient does not pay or |
| |
bear income tax on them, or |
| |
(b) | by a deduction in calculating profits or gains. |
| |
(3) | In this section “relief from income tax” includes a tax credit. |
| 10 |
Person liable to counteraction of income tax advantages |
| |
617 | Person liable to counteraction of income tax advantage |
| |
(1) | This section applies to a person in respect of a transaction in securities or two |
| |
or more such transactions if the person is in a position to obtain or has obtained |
| |
| 15 |
(a) | in circumstances where any of the provisions specified in subsection (2) |
| |
applies in relation to the person, and |
| |
| |
| |
(ii) | the combined effect of the transactions. |
| 20 |
| |
section 619 (abnormal dividends used for exemptions or reliefs |
| |
| |
section 620 (deductions from profits obtained following distribution or |
| |
dealings (circumstance B)), |
| 25 |
section 621 (receipt of consideration representing company’s assets, |
| |
future receipts or trading stock (circumstance C)), |
| |
section 622 (receipt of consideration in connection with relevant company |
| |
distribution (circumstance D)), and |
| |
section 623 (receipt of assets of relevant company (circumstance E)). |
| 30 |
(3) | For the purposes of this Chapter an income tax advantage is treated as obtained |
| |
or obtainable by a person in consequence of— |
| |
(a) | a transaction in securities, or |
| |
(b) | the combined effect of two or more such transactions, |
| |
| if it is obtained or obtainable by the person in consequence of the combined |
| 35 |
effect of the transaction or transactions and the liquidation of a company. |
| |
(4) | This section is subject to— |
| |
section 618 (exception where no tax avoidance object shown), |
| |
section 629(3) (disapplication of this section where person receiving |
| |
preliminary notification that this section may apply makes a statutory |
| 40 |
declaration and the relevant officer of Revenue and Customs sees no |
| |
reason to take further action), and |
| |
section 630(5) (determination by tribunal that there is no prima facie case |
| |
that this section applies). |
| |
|
| |
|