|
| |
|
(6) | For this purpose any arrangement makes other relevant provision if it makes |
| |
| |
(a) | for the receipt of any money or other asset from the borrower under |
| |
that arrangement for the purpose of enabling the other person to make |
| |
that subsequent purchase, or |
| 5 |
(b) | for the discharge of any liability to the borrower under that |
| |
arrangement for that purpose (whether by way of set off or otherwise). |
| |
(7) | Condition E is that, in accordance with generally accepted accounting |
| |
| |
(a) | the subsequent buying of the securities or the other securities by the |
| 10 |
| |
(b) | the receipt of the asset from the borrower, or the discharge of the |
| |
liability to the borrower, under the arrangement or other arrangement, |
| |
| would extinguish the financial liability in respect of the advance recorded in |
| |
the accounts of the borrower. |
| 15 |
(8) | For the purposes of conditions A to E references to the borrower include a firm |
| |
of which the borrower is a member. |
| |
550 | Ignoring effect on borrower of sale of securities |
| |
(1) | This section applies if a company (“the borrower”)— |
| |
(a) | has a debtor repo or a debtor quasi-repo, or |
| 20 |
(b) | has a liability which is discharged under a relevant arrangement. |
| |
(2) | A relevant arrangement is one— |
| |
(a) | in relation to which conditions C and D in section 549 are met, and |
| |
(b) | the main purpose or one of the main purposes of which is the obtaining |
| |
| 25 |
(3) | For the purposes of the charge to corporation tax in respect of income of the |
| |
borrower arising while the arrangement is in force, the Corporation Tax Acts |
| |
| |
(a) | the borrower held the securities which are initially sold for any period |
| |
for which the arrangement is in force, and |
| 30 |
(b) | the borrower did not receive in that period amounts representative of |
| |
income payable in respect of the securities. |
| |
(4) | Subsection (3) is subject to subsections (5) and (6). |
| |
(5) | No amount is to be charged to corporation tax as a result of subsection (3)(a) |
| |
| 35 |
(a) | it is, in accordance with generally accepted accounting practice, |
| |
recognised in determining the borrower’s profit or loss for that or any |
| |
| |
(b) | it is taken into account in calculating the amounts which are so |
| |
| 40 |
(6) | If the securities which are initially sold are overseas securities, the entitlement |
| |
of the borrower to double taxation relief in respect of any overseas dividend |
| |
payable in respect of those securities is determined as if— |
| |
(a) | subsection (3) were omitted, |
| |
(b) | the borrower received a payment of an amount which is representative |
| 45 |
| |
|
| |
|
| |
|
(c) | the payment were made under a requirement of the arrangement, and |
| |
(d) | the payment were made on the date on which that dividend is payable. |
| |
(7) | For the purposes of this section “double taxation relief” means any relief given |
| |
under or as a result of Part 18 of ICTA. |
| |
551 | Relief for borrower for finance charges in respect of the advance |
| 5 |
(1) | This section applies if a company (“the borrower”) has a debtor repo or a |
| |
| |
(2) | The advance under the debtor repo or debtor quasi-repo is, in the case of the |
| |
borrower, to be treated for the purposes of Part 5 and this Part as a money debt |
| |
| 10 |
(a) | is owed by the borrower or, if the borrower is a member of a firm which |
| |
receives the advance, by the firm, and |
| |
(b) | is owed to the person to whom the securities are initially sold. |
| |
(3) | The arrangement is, in the case of the borrower, to be treated for the purposes |
| |
of Part 5 and this Part as a transaction for the lending of money from which that |
| 15 |
debt is treated as arising for those purposes. |
| |
(4) | Any amount which, in accordance with generally accepted accounting |
| |
practice, is recorded as a finance charge in respect of the advance in— |
| |
(a) | the accounts of the borrower, or |
| |
(b) | if the borrower is a member of a firm which receives the advance, the |
| 20 |
| |
| is treated for the purposes of Part 5, this Part and Part 15 of ITA 2007 |
| |
(deduction of income tax at source) as interest payable under that debt. |
| |
(5) | That interest is treated for those purposes as paid at the earlier of— |
| |
(a) | the time when the relevant repurchase takes place, and |
| 25 |
(b) | the time when it becomes apparent that that repurchase will not take |
| |
| |
(6) | For this purpose “the relevant repurchase” means— |
| |
(a) | if the borrower has a debtor repo, the subsequent buying of the |
| |
securities or similar securities, and |
| 30 |
(b) | if the borrower has a debtor quasi-repo— |
| |
(i) | the subsequent buying of the securities or other securities by the |
| |
| |
(ii) | the receipt of the asset from the borrower, or |
| |
(iii) | the discharge of the liability to the borrower, |
| 35 |
| |
| |
552 | General provisions about arrangements |
| |
(1) | For the purposes of this Chapter it does not matter whether or not provision of |
| |
any arrangement conferring a right or imposing an obligation on any person to |
| 40 |
buy any securities is subject to any conditions. |
| |
|
| |
|
| |
|
(2) | For the purposes of this Chapter an arrangement is in force from the time when |
| |
the securities are initially sold until the earlier of— |
| |
(a) | the time when the relevant repurchase takes place, and |
| |
(b) | the time when it becomes apparent that that repurchase will not take |
| |
| 5 |
(3) | In subsection (2) “the relevant repurchase” has the meaning given by |
| |
| |
(4) | In the case of a creditor repo, it means the subsequent sale of the securities or |
| |
| |
(5) | In the case of a creditor quasi-repo, it means— |
| 10 |
(a) | the subsequent sale of the securities or other securities by the lender, |
| |
(b) | the receipt of the asset from the lender, or |
| |
(c) | the discharge of the liability to the lender, |
| |
| |
(6) | In the case of a debtor repo, it means the subsequent buying of the securities or |
| 15 |
| |
(7) | In the case of a debtor quasi-repo, it means— |
| |
(a) | the subsequent buying of the securities or other securities by the |
| |
| |
(b) | the receipt of the asset from the borrower, or |
| 20 |
(c) | the discharge of the liability to the borrower, |
| |
| |
553 | Persons buying or selling for others |
| |
(1) | For the purposes of this Chapter, in any case where— |
| |
(a) | a person (“A”) buys securities (or has a right or obligation to buy |
| 25 |
| |
(b) | the securities are (or are to be) held for the benefit of another person |
| |
| |
| B (not A) is treated as buying (or having the right or obligation to buy) the |
| |
| 30 |
| |
(a) | a person (“C”) sells securities, but |
| |
(b) | the proceeds of the sale are held for the benefit of another person (“D”), |
| |
| D (not C) is treated as selling the securities. |
| |
554 | Power to modify this Chapter |
| 35 |
(1) | The Treasury may by regulations provide for all or any of the provisions of this |
| |
Chapter to apply with modifications in relation to— |
| |
(a) | cases where section 555 (non-standard repo cases) applies, or |
| |
(b) | cases involving redemption arrangements, or |
| |
| 40 |
(2) | A case involves redemption arrangements if— |
| |
|
| |
|
| |
|
(a) | arrangements, corresponding to those made in cases where a company |
| |
has a repo, are made in relation to securities that are to be redeemed in |
| |
the period after their sale, and |
| |
(b) | the arrangements are such that a person (instead of having the right or |
| |
obligation to buy those securities, or similar or other securities, at any |
| 5 |
subsequent time) has a right or obligation in respect of the benefits |
| |
which will result from the redemption. |
| |
(3) | The regulations may make— |
| |
(a) | different provision for different cases, and |
| |
(b) | incidental, supplemental, consequential and transitional provision and |
| 10 |
| |
(4) | In this section and section 555— |
| |
“modifications” include exceptions and omissions, and |
| |
| |
(a) | a debtor repo or debtor quasi-repo, or |
| 15 |
(b) | a creditor repo or creditor quasi-repo (including anything |
| |
treated, as a result of section 547, as a creditor repo for the |
| |
purposes of section 546). |
| |
555 | Cases where section 554 applies: non-standard repos |
| |
(1) | The cases to which this section applies are where— |
| 20 |
(a) | a company has a repo, |
| |
(b) | there has been a sale of the securities under the arrangement or |
| |
arrangements by reference to which the company has the repo, and |
| |
(c) | any of conditions A to C is met in relation to the repo. |
| |
(2) | Condition A is that those securities, or similar or other securities, are not |
| 25 |
subsequently bought under the arrangement or arrangements. |
| |
(3) | Condition B is that provision is made by or under an arrangement for different |
| |
or additional securities to be treated as, or as included with, securities which, |
| |
for the purposes of the subsequent purchase, are to represent those initially |
| |
| 30 |
(4) | Condition C is that provision is made by or under an arrangement for |
| |
securities to be treated as not so included. |
| |
| |
556 | Meaning of securities and similar securities |
| |
(1) | In this Chapter “securities” (except in the definition of “overseas securities” in |
| 35 |
| |
(a) | shares, stock or other securities issued by— |
| |
(i) | the government of the United Kingdom, |
| |
(ii) | any public or local authority in the United Kingdom, or |
| |
(iii) | any UK resident company or other UK resident body, or |
| 40 |
| |
(2) | For the purposes of this Chapter securities are similar if they entitle their |
| |
| |
|
| |
|
| |
|
(a) | the same rights against the same persons as to capital, interest and |
| |
| |
(b) | the same remedies for the enforcement of those rights. |
| |
(3) | For the purposes of subsection (2) any difference in— |
| |
(a) | the total nominal amounts of the respective securities, |
| 5 |
(b) | the form in which they are held, or |
| |
(c) | the way in which they can be transferred, |
| |
| |
557 | Meaning of person receiving an asset |
| |
For the purposes of this Chapter references to a person receiving any asset |
| 10 |
| |
(a) | obtaining the value of any asset directly or indirectly, or |
| |
(b) | otherwise deriving any benefit from it directly or indirectly. |
| |
558 | Interpretation of accounting expressions |
| |
(1) | In determining for the purposes of this Chapter whether an amount is recorded |
| 15 |
as a financial asset or liability in respect of the advance, it is assumed that the |
| |
period of account in which the advance is received or made ended immediately |
| |
after the receipt or making of the advance. |
| |
(2) | In its application for the purposes of this Chapter, section 309(1) applies as if |
| |
the reference to a company were a reference to a person. |
| 20 |
| |
| |
| |
(a) | in the case of a creditor repo, has the same meaning as in section |
| |
| 25 |
(b) | in the case of a creditor quasi-repo, has the same meaning as in |
| |
| |
(c) | in the case of a debtor repo, has the same meaning as in section |
| |
| |
(d) | in the case of a debtor quasi-repo, has the same meaning as in |
| 30 |
| |
“arrangement” includes any agreement or understanding (whether or not |
| |
it is legally enforceable), |
| |
“creditor quasi-repo” has the meaning given by section 544, |
| |
“creditor repo” has the meaning given by section 543, |
| 35 |
“debtor quasi-repo” has the meaning given by section 549, |
| |
“debtor repo” has the meaning given by section 548, |
| |
“discharge”, in relation to a liability, means the discharge of the liability in |
| |
whole or in part (and “discharged” is to be read accordingly), |
| |
“overseas dividend”, in relation to overseas securities, means any interest, |
| 40 |
dividend or other annual payment payable in respect of the securities, |
| |
| |
“overseas securities” means shares, stock or other securities issued by— |
| |
|
| |
|
| |
|
(a) | a government or public or local authority of a territory outside |
| |
| |
(b) | any other body of persons not resident in the United Kingdom. |
| |
| |
Investment life insurance contracts |
| 5 |
| |
560 | Introduction to Chapter |
| |
(1) | This Chapter makes provision about investment life insurance contracts to |
| |
which relevant companies are party. |
| |
| 10 |
(a) | sections 562 to 565 (which make provision about treating the contracts |
| |
as creditor relationships in relation to those companies for the purposes |
| |
| |
(b) | sections 566 to 569 (which make provision for cases where the relevant |
| |
company was a party to the contract before the beginning of the |
| 15 |
company’s first accounting period beginning on or after 1 April 2008). |
| |
(3) | In this Chapter “relevant company” means a company which is not a life |
| |
| |
(4) | In subsection (3) “life insurance company” means— |
| |
(a) | an insurance company (as defined in section 431(2) of ICTA) which |
| 20 |
carries on long-term business (as defined in that section), or |
| |
(b) | a friendly society which would be such an insurance company but for |
| |
the words “(other than a friendly society)” in the definition of |
| |
“insurance company” in that section. |
| |
(5) | For the meaning of “investment life insurance contract”, see section 561. |
| 25 |
561 | Meaning of “investment life insurance contract” |
| |
(1) | In this Chapter “investment life insurance contract” means— |
| |
(a) | a policy of life insurance which has, or is capable of acquiring, a |
| |
| |
(b) | a contract for a purchased life annuity, or |
| 30 |
(c) | a capital redemption policy, |
| |
| other than a relevant excluded contract. |
| |
| |
“capital redemption policy” means a contract made in the course of capital |
| |
redemption business (as defined in section 431(2ZF) of ICTA), |
| 35 |
“purchased life annuity” means an annuity— |
| |
(a) | granted for consideration in money or money’s worth in the |
| |
ordinary course of a business of granting annuities on human |
| |
| |
|
| |
|
| |
|
(b) | payable for a term ending at a time ascertainable only by |
| |
reference to the end of a human life (whether or not the annuity |
| |
may in some circumstances end before or after the life), and |
| |
“relevant excluded contract” means— |
| |
(a) | an investment life insurance contract under a registered |
| 5 |
| |
(b) | an investment life insurance contract purchased with sums or |
| |
assets held for the purposes of a registered pension scheme, or |
| |
(c) | a policy of life insurance issued in respect of an insurance made |
| |
| 10 |
(3) | A policy of life insurance issued in respect of an insurance made before 14 |
| |
March 1989 is treated for the purposes of this Chapter as issued in respect of |
| |
one made on or after that date if it is varied on or after that date so as— |
| |
(a) | to increase the benefits secured, or |
| |
(b) | to extend the term of the insurance. |
| 15 |
(4) | For the purposes of subsection (3) any exercise of rights conferred by a policy |
| |
is to be regarded as a variation of it. |
| |
Investment life assurance contracts treated as creditor relationships |
| |
562 | Contract to be loan relationship |
| |
(1) | If a relevant company is a party to an investment life insurance contract, for the |
| 20 |
purposes of Part 5 (loan relationships) the contract is, in relation to the |
| |
company, a creditor relationship of the company. |
| |
(2) | Subsection (1) is subject to subsection (4). |
| |
(3) | Subsection (4) applies if— |
| |
(a) | the amount or value of a lump sum payable under an investment life |
| 25 |
contract by reason of death or the onset of critical illness, exceeds |
| |
(b) | the surrender value of the contract immediately before the time when |
| |
the lump sum becomes payable. |
| |
(4) | If this subsection applies, that excess is not to be brought into account as a |
| |
credit under Part 5 representing a profit from a related transaction arising as a |
| 30 |
result of the lump sum becoming payable. |
| |
563 | Increased non-trading credits for BLAGAB and EEA taxed contracts |
| |
(1) | This section applies if— |
| |
(a) | as a result of section 562 the relevant company is required to bring into |
| |
account for an accounting period a non-trading credit representing a |
| 35 |
profit from a related transaction, and |
| |
(b) | the investment life insurance contract is— |
| |
(i) | a BLAGAB contract, or |
| |
(ii) | a contract which is subject to a relevant comparable EEA tax |
| |
| 40 |
(2) | For the meaning of “BLAGAB contract” and of a contract being subject to a |
| |
relevant comparable EEA tax charge, see section 564. |
| |
(3) | The non-trading credit is treated as increased by the relevant amount. |
| |
|
| |
|