Finance Act 1996

Repo transactions and stock-lending U.K.

15 (1) In determining the debits and credits to be brought into account for the purposes of this Chapter in respect of any loan relationship, it shall be assumed that a disposal or acquisition to which this paragraph applies is not a related transaction F1 . . . . U.K.

(2) This paragraph applies to any such disposal or acquisition of rights or liabilities under the relationship as is made in pursuance of any repo or stock-lending arrangements [F2 and as is, in the case of those arrangements, the disposal or acquisition effected by—

(a) the transfer by A to B mentioned in sub-paragraph (3)(a) below, or

(b) any transfer to A [F3 by B] that gives effect to the entitlement or requirement described in sub-paragraph (3)(b) below.]

(3) In this paragraph “repo or stock-lending arrangements” means [F4 (subject to sub-paragraph (3A))] any arrangements consisting in or involving an agreement or series of agreements under which provision is made—

(a) for the transfer from one person [F5 (“A”)] to another [F5 (“B”)] of any rights under that relationship; and

(b) for [F6 A] F7 ... subsequently to be or become entitled, or required—

(i) to have the same or equivalent rights transferred to him; or

(ii) to have rights in respect of benefits accruing in respect of that relationship on redemption.

[F8 (3A) Arrangements are not repo or stock-lending arrangements if they are excluded from section 730A of the Taxes Act 1988 by subsection (8) of that section.]

(4) For the purposes of sub-paragraph (3) above rights under a loan relationship are equivalent to rights under another such relationship if they entitle the holder of an asset representing the relationship—

(a) to the same rights against the same persons as to capital, interest and dividends, and

(b) to the same remedies for the enforcement of those rights,

notwithstanding any difference in the total nominal amounts of the assets, in the form in which they are held or in the manner in which they can be transferred.

[F9 (4A) In consequence of sub-paragraph (1) above—

(a) the person transferring the rights mentioned in sub-paragraph (3)(a) above does not, as a result of the transfer, fall to be regarded for the purposes of this Chapter as ceasing to be party to the loan relationship; F10 ...

F10 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F11 but nothing in sub-paragraph (1) above prevents the person to whom those rights are transferred from being regarded for the purposes of this Chapter as being party to the loan relationship as a result of the transfer.]]

(5) Nothing in this paragraph shall prevent any redemption or discharge of rights or liabilities under a loan relationship to which any repo or stock-lending arrangements relate from being treated for the purposes of this Chapter as a related transaction (within the meaning of section 84 of this Act).

(6) This paragraph is without prejudice to section 730A(2) and (6) of the Taxes Act 1988 (deemed payments of loan interest in the case of the sale and re-purchase of securities).

[F12 (6A) Nothing in this paragraph affects section 807A(2A) of the Taxes Act 1988 (double taxation relief in the case of repo or stock lending agreement).]

(7) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this paragraph.

Textual Amendments

F1 Words in Sch. 9 para. 15(1) repealed (24.7.2002 with effect in accordance with s. 79(3) of and Sch. 23 to the repealing Act) by Finance Act 2002 (c. 23), s. 141, Sch. 40 Pt. 3(10)

F2 Words in Sch. 9 para. 15(2) added (with effect in accordance with Sch. 7 para. 19(5)(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 19(2)

F3 Words in Sch. 9 para. 15(2)(b) inserted (with effect in accordance with Sch. 6 para. 20(3) of the amending Act) by Finance Act 2006 (c. 25), Sch. 6 para. 20(2)

F4 Words in Sch. 9 para. 15(3) inserted (with effect in accordance with Sch. 38 para. 21(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 38 para. 18(2)

F5 Words in Sch. 9 para. 15(3)(a) inserted (with effect in accordance with Sch. 7 para. 19(5)(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 19(3)(a)

F6 Word in Sch. 9 para. 15(3)(b) substituted (with effect in accordance with Sch. 7 para. 19(5)(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 19(3)(b)

F7 Words in Sch. 9 para. 15(3)(b) repealed (with effect in accordance with Sch. 38 para. 21(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 38 para. 19, Sch. 43 Pt. 3(15)

F8 Sch. 9 para. 15(3A) inserted (with effect in accordance with Sch. 38 para. 21(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 38 para. 18(3)

F9 Sch. 9 para. 15(4A) inserted (24.7.2002 with effect as mentioned in s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), s. 82(1), Sch. 25 Pt. 1 para. 32(2)

F10 Sch. 9 para. 15(4A)(b) and the preceding word repealed (with effect in accordance with Sch. 7 para. 19(5)(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 19(4), Sch. 11 Pt. 2(8)

F11 Words in Sch. 9 para. 15(4A) substituted (with effect in accordance with Sch. 7 para. 19(5)(6) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 19(4)

F12 Sch. 9 para. 15(6A) inserted (24.7.2002 with effect as mentioned in s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), s. 82(1), Sch. 25 Pt. 1 para. 32(3)

Modifications etc. (not altering text)

C1 Sch. 9 para. 15: definition of

“repo or stock-lending arrangements”

modified (1.1.1999) by S.I. 1998/3177, reg. 19(1)