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625 | Transfers with unrealised interest |
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(1) | For the purposes of this Chapter securities are transferred with unrealised |
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interest if they are transferred with the right to receive interest payable on an |
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interest payment day falling before the settlement day. |
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(2) | Such interest is referred to in this Chapter as “unrealised interest”. |
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626 | Transfers of variable rate securities |
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(1) | Sections 623 and 624 do not apply to transfers of variable rate securities. |
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(2) | Such transfers are not treated as transfers with accrued interest or transfers |
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without accrued interest. |
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627 | Meaning of “variable rate securities” |
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(1) | For the purposes of this Chapter securities are “variable rate securities” unless |
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their terms of issue provide that throughout the period from issue to |
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redemption (whenever redemption might occur) they are to carry interest at a |
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rate which falls into one, and one only, of the categories specified in subsection |
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(a) | a fixed rate which is the same throughout the period, |
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(b) | a rate which bears the same fixed relationship to a standard published |
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base rate throughout the period, and |
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(c) | a rate which bears the same fixed relationship to a published index of |
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prices throughout the period. |
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(3) | In subsection (2) “published index of prices” means the retail prices index or |
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any similar general index of prices which is published by the government of |
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any territory outside the United Kingdom or by an agent of such a government. |
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(4) | In determining whether new securities (within the meaning of section 649) |
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(new securities issued with extra return) are variable rate securities, the interest |
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payable on them on the first interest payment day after their issue is treated as |
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payable in respect of the period beginning with the relevant period and ending |
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(5) | In subsection (4) “the relevant period” has the meaning given by section 649(8). |
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Calculating accrued income profits and losses |
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628 | Making accrued income profits and losses: general rule |
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(1) | This section sets out the general rule for determining whether a person is |
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treated as making accrued income profits or accrued income losses where |
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securities are transferred by or to the person. |
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(2) | This section does not apply in a case where section 630 applies. |
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(3) | A separate calculation is to be made for each kind of security that is transferred |
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by or to the person and for each interest period of each such kind of security. |
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(4) | Each such calculation is to find— |
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|
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|
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(a) | the total amount (“A”) of the payments treated under this Chapter as |
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made to the person in the interest period in question in respect of |
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transfers of securities of the particular kind, and |
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(b) | the total amount (“B”) of the payments treated under this Chapter as |
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made by the person in that period in respect of such transfers. |
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(5) | A person is treated as making accrued income profits in an interest period as a |
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result of transfers of securities of a particular kind if A exceeds B. |
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(6) | A person is treated as making accrued income losses in an interest period as a |
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result of transfers of securities of a particular kind if B exceeds A. |
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(7) | For the payments that are treated as made on transfers of different kinds, see— |
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section 632 (payment on transfer with accrued interest), |
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section 633 (payment on transfer without accrued interest), |
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section 634 (payment on transfer with unrealised interest), |
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section 635 (payment on transfer of variable rate securities), and |
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section 637(2) (accrued income losses treated as payment on transfer in |
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| |
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section 638(2) (no account to be taken of any payment treated as made by |
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or to excluded transferor or transferee), and |
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Chapter 3 (exemptions relating to interest on securities). |
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629 | Calculating accrued income profits and losses where section 628 applies |
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(1) | If section 628(5) applies, the amount of the accrued income profits treated as |
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made is equal to the excess mentioned in section 628(5). |
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(2) | If section 628(6) applies, the amount of the accrued income losses treated as |
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made is equal to the excess mentioned in section 628(6). |
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630 | Making accrued income profits: settlement day outside interest period |
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(1) | This section applies if— |
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(a) | there is a transfer of securities with unrealised interest or a transfer of |
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variable rate securities, and |
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(b) | the settlement day for the transfer falls after the end of the only or last |
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interest period of the securities. |
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(2) | The transferor is treated as making accrued income profits. |
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section 638(3) (no account to be taken of transfer if transferor is excluded |
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section 681 (exemption for unrealised interest received by transferee after |
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631 | Amount of accrued income profits where section 630 applies |
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(1) | In the case of a transfer of securities with unrealised interest to which section |
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630 applies, the amount of the accrued income profits treated as made is equal |
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to the unrealised interest. |
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|
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|
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(2) | Subsection (1) is subject to section 660 (transfers with unrealised interest: |
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(3) | In the case of a transfer of variable rate securities to which section 630 applies, |
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the amount of the accrued income profits treated as made is such amount as is |
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The payments treated as made on transfers |
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632 | Payment on transfer with accrued interest |
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(1) | In the case of a transfer of securities with accrued interest, for the purposes of |
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this Chapter a payment is treated as made by the transferee to the transferor in |
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the interest period in which the settlement day falls. |
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(2) | The amount of that payment depends on whether the transfer is under an |
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arrangement by which the transferee accounts to the transferor separately— |
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(a) | for the consideration for the securities, and |
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(b) | for gross interest accruing to the settlement day. |
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(3) | If the transfer is under such an arrangement, the amount of the payment is the |
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amount of gross interest which the transferee accounts for. |
| |
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(a) | the transfer is not under such an arrangement, and |
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(b) | the settlement day is itself an interest payment day for the securities, |
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| the amount of the payment is the amount of interest payable on the securities |
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| |
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(a) | the transfer is not under such an arrangement, and |
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(b) | the settlement day is not an interest payment day for the securities, |
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| the amount of the payment is an amount equal to—![equation: cross[char[I],over[char[A],char[B]]]](missing.gif) |
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I is the interest payable on the securities on the first interest payment day |
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after the settlement day (“the payment day”), |
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A is the number of days in the period beginning with the first day on |
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which that interest accrues and ending with the settlement day, and |
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B is the number of days in the period beginning with the first day on |
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which that interest accrues and ending with the payment day. |
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(6) | For the purposes of subsection (5), the first day on which that interest accrues |
| |
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(a) | the day after the last interest payment day before the settlement day, or |
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(b) | if there was no interest payment day before the settlement day, the first |
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day of the first interest period of the securities. |
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(7) | In a case where no one is treated as the transferor (see sections 648(4) and |
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649(5)), this section has effect as if— |
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(a) | in subsection (1) the words “to the transferor” were omitted, and |
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|
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|
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(b) | subsections (2), (3), (4)(a) and (5)(a) were omitted. |
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(8) | In a case where no one is treated as the transferee (see sections 621(2) and (3) |
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and 648(2)), this section has effect as if— |
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(a) | in subsection (1) the words “by the transferee” were omitted, and |
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(b) | subsections (2), (3), (4)(a) and (5)(a) were omitted. |
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(9) | Subsections (2) to (5) are subject to section 662 (new securities issued with extra |
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return: special rules about payments). |
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(10) | Subsections (4) and (5) are subject to section 659 (transfers with or without |
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accrued interest: interest in default). |
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633 | Payment on transfer without accrued interest |
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(1) | In the case of a transfer of securities without accrued interest, for the purposes |
| |
of this Chapter a payment is treated as made by the transferor to the transferee |
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in the interest period in which the settlement day falls. |
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(2) | The amount of that payment depends on whether the transfer is under an |
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arrangement by which the transferor accounts to the transferee for gross |
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interest accruing from the settlement day to the next interest payment day. |
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(3) | If the transfer is under such an arrangement, the amount of the payment is the |
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amount of gross interest which the transferor accounts for. |
| |
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(a) | the transfer is not under such an arrangement, and |
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(b) | the settlement day is itself an interest payment day for the securities, |
| |
| the amount of the payment is nil. |
| |
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(a) | the transfer is not under such an arrangement, and |
| |
(b) | the settlement day is not an interest payment day for the securities, |
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| the amount of the payment is an amount equal to—![equation: cross[char[I],over[char[A],char[B]]]](missing.gif) |
| |
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I is the interest payable on the securities on the first interest payment day |
| |
after the settlement day (“the payment day”), |
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A is the number of days in the period beginning with the day after the |
| 30 |
settlement day and ending with the payment day, and |
| |
B is the number of days in the period beginning with the first day on |
| |
which that interest accrues and ending with the payment day. |
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(6) | For the purposes of subsection (5), the first day on which that interest accrues |
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(a) | the day after the last interest payment day before the settlement day, or |
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(b) | if there is no interest payment day before the settlement day, the first |
| |
day of the first interest period of the securities. |
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(7) | In a case where no one is treated as the transferor (see section 648(4)), this |
| |
section has effect as if— |
| 40 |
|
| |
|
| |
|
(a) | in subsection (1) the words “by the transferor” were omitted, and |
| |
(b) | subsections (2), (3), (4)(a) and (5)(a) were omitted. |
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(8) | In a case where no one is treated as the transferee (see sections 621(2) and (3) |
| |
and 648(2)), this section has effect as if— |
| |
(a) | in subsection (1) the words “to the transferee” were omitted, and |
| 5 |
(b) | subsections (2), (3), (4)(a) and (5)(a) were omitted. |
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(9) | Subsection (5) is subject to section 659 (transfers with or without accrued |
| |
interest: interest in default). |
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(10) | See also section 663(2) (reduction of amount of payment under this section |
| |
where transfer to maker of manufactured payments). |
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634 | Payment on transfer with unrealised interest |
| |
(1) | In the case of a transfer of securities with unrealised interest where the |
| |
settlement day falls within an interest period, for the purposes of this Chapter |
| |
a payment is treated as made to the transferor in that period. |
| |
(2) | The amount of the payment is equal to the unrealised interest. |
| 15 |
(3) | Subsection (2) is subject to section 660 (transfers with unrealised interest: |
| |
| |
(4) | No one is treated as making the payment. |
| |
(5) | Accordingly, the payment is not brought into account in determining whether |
| |
the transferee is treated as making accrued income profits or losses under |
| 20 |
| |
(6) | But see section 681 (exemption for unrealised interest received by transferee |
| |
| |
(7) | See section 630 for the rules that apply to transfers of securities with unrealised |
| |
interest where the settlement day falls outside an interest period. |
| 25 |
635 | Payment on transfer of variable rate securities |
| |
(1) | In the case of a transfer of variable rate securities where the settlement day falls |
| |
within an interest period, for the purposes of this Chapter a payment is treated |
| |
as made to the transferor in that period. |
| |
(2) | The amount of the payment is such amount as is just and reasonable. |
| 30 |
(3) | No one is treated as making the payment. |
| |
(4) | Accordingly, the payment is not brought into account in determining whether |
| |
the transferee is treated as making accrued income profits or losses under |
| |
| |
(5) | See section 630 for the rules that apply to transfers of variable rate securities |
| 35 |
where the settlement day falls outside an interest period. |
| |
|
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