The Taxation of Securitisation Companies (Amendment) Regulations 2007

Amendments to the Taxation of Securitisation Companies Regulations 2006

2.—(1) The Taxation of Securitisation Companies Regulations 2006 are amended as follows.

(2) In regulation 2 (interpretation) in paragraph (1) in the definition of “financial asset”—

(a) in subparagraph (a) at the beginning insert “subject to paragraph (b)(ii)”; and

(b) for paragraph (b) substitute—

“(b) does not include—

(i) shares (other than shares in a securitisation company which is party to the capital market arrangement);

(ii) derivative contracts as defined for the purposes of Schedule 26 to the Finance Act 2002(1) where the underlying subject matter is or includes shares (other than shares in a securitisation company which is party to the capital market arrangement) or land;

(iii) loan relationships with embedded derivatives within section 94A(1) of the Finance Act 1996 (loan relationships with embedded derivatives)(2) where the underlying subject matter of the embedded derivative is or includes shares or land;

(iv) relevant assets within paragraph 7(1) of Schedule 6 to the Finance (No. 2) Act 2005 (loan relationships with embedded derivatives)(3) where the underlying subject matter of any embedded derivative is or includes shares or land.”.

(3) In regulation 3 (scope of these Regulations) in paragraph (2)(c) for “regulation 13” substitute “regulations 13 and 13A”.

(4) In regulation 6 (meaning of “asset-holding company”) in paragraph (3) after “company’s” insert “initial”.

(5) In regulation 7 (meaning of “intermediate borrowing company”)—

(a) in paragraph (2) after sub-paragraph (a) insert—

“(aa) a partnership that would be an asset-holding company if it were a company,”,

(b) in paragraph (3) after “company’s” insert “initial”.

(6) In regulation 8 (meaning of “warehouse company”)—

(a) renumber regulation 8 as 8(1);

(b) at the end insert—

“(2) For the purposes of these Regulations the business of a warehouse company described in paragraph (1) shall be referred to as a “warehouse arrangement”.”.

(7) In regulation 10 (meaning of “retained profit”) in paragraph (1)—

(a) for “or a” substitute “, a”;

(b) after “transaction” insert “or a warehouse arrangement”.

(8) In regulation 12 (securitisation companies that have an unallowable purpose) in paragraph (4) in the definition of “tax advantage” for “section 709(1)” substitute “section 840ZA”(4).

(9) After regulation 13 insert—

“Securitisation companies to which section 83 of the Finance Act 2005 does not apply

13A.   These Regulations do not apply to a company in a case where—

(a) section 83(1) of the Finance Act 2005 does not apply by virtue of an election under regulation 2 of the Securitisation Companies (Application of Section 83(1) of the Finance Act 2005: Accounting Standards) Regulations 2007, and

(b) the company continues to be party to the arrangement or transaction referred to in paragraph (1)(b) of regulation 2 of those Regulations.”.

(10) In regulation 19 (non-application of provisions of Schedule 9 to the Finance Act 1996) insert the following paragraphs at the end—

“(3) Paragraph 17 of that Schedule (deeply discounted securities where companies have a connection)(5) shall not apply if the person standing in the position of a creditor as respects a security within that paragraph is a securitisation company.

(4) Paragraph 18 of that Schedule (deeply discounted securities of close companies)(6) shall not apply if the person standing in the position of a creditor as respects a security within that paragraph is a securitisation company.”.

(1)

2002 c. 23. Derivative contracts are defined in paragraph 2 of Schedule 26 and paragraph 2 has been amended by article 3 of S.I. 2004/2201 and article 3 of S.I. 2006/3269.

(2)

1996 c. 8; section 94A was inserted by paragraph 13 of Schedule 10 to the Finance Act 2004 (c. 9) and amended by paragraph 28(1) and (2) of Schedule 4 to the Finance Act 2005.

(3)

2005 c. 22.

(4)

Section 840ZA of the Income and Corporation Taxes Act 1988 (c. 1) was inserted paragraph 225 of Schedule 1 to the Income Tax Act 2007 (c. 3).

(5)

Paragraph 17 of Schedule 9 to the Finance Act 1996 (c. 8) was amended by paragraphs 1 and 33 of Schedule 25 and Part 3(12) of Schedule 40 to the Finance Act 2002 (c. 23), paragraphs 4(2) and (3) of Schedule 34 and paragraphs 1 and 4 of Schedule 37 to the Finance Act 2003 (c. 14) and paragraphs 485 and 489(1) to (5) of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005 (c. 5).

(6)

Paragraph 18 of Schedule 9 to the Finance Act 1996 was amended by paragraphs 1 and 34 of Schedule 25 and Part 3(12) of Schedule 40 to the Finance Act 2002 (c. 23), paragraphs 1 and 5 of Schedule 37 to the Finance Act 2003 (c. 14), paragraph 6 of Schedule 6 and Part 2(4) of Schedule 42 to the Finance Act 2004 (c. 12), and paragraphs 485 and 489(1), (6) to (8) of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005 (c. 5) and paragraph 3 of Schedule 8 and Part 2(9) of Schedule 11 to the Finance (No. 2) Act 2005 (c. 22).