Part 10A

Alternative finance arrangements

Arrangements that are alternative finance arrangements

Investment bond arrangements
564G
1
This section applies to arrangements if—
a
they provide for one person (“the bond-holder”) to pay a sum of money (“the capital”) to another (“the bond-issuer”),
b
they identify assets, or a class of assets, which the bond-issuer will acquire for the purpose of generating income or gains directly or indirectly (“the bond assets”),
c
they specify a period at the end of which they cease to have effect (“the bond term”),
d
the bond-issuer undertakes under the arrangements—
i
to dispose at the end of the bond term of any bond assets which are still in the bond-issuer's possession,
ii
to make a repayment of the capital (“the redemption payment”) to the bond-holder during or at the end of the bond-term (whether or not in instalments), and
iii
to pay to the bond-holder other payments on one or more occasions during or at the end of the bond term (“additional payments”),
e
the amount of the additional payments does not exceed an amount which would be a reasonable commercial return on a loan of the capital,
f
under the arrangements the bond-issuer undertakes to arrange for the management of the bond assets with a view to generating income sufficient to pay the redemption payment and additional payments,
g
the bond-holder is able to transfer the rights under the arrangements to another person (who becomes the bond-holder because of the transfer),
h
the arrangements are a listed security on a recognised stock exchange
or admitted to trading on a multilateral trading facility operated by
a regulated
recognised stock exchange
, and
i
the arrangements are wholly or partly treated in accordance with international accounting standards as a financial liability of the bond-issuer, or would be if the bond-issuer applied those standards.
2
For the purposes of subsection (1)—
a
the bond-issuer may acquire bond assets before or after the arrangements take effect,
b
the bond assets may be property of any kind, including rights in relation to property owned by someone other than the bond-issuer,
c
the identification of the bond assets mentioned in subsection (1)(b) and the undertakings mentioned in subsection (1)(d) and (f) may (but need not) be described as, or accompanied by a document described as, a declaration of trust,
d
a reference to the management of assets includes a reference to disposal,
e
the bond-holder may (but need not) be entitled under the arrangements to terminate them, or participate in terminating them, before the end of the bond term,
f
the amount of the additional payments may be—
i
fixed at the beginning of the bond term,
ii
determined wholly or partly by reference to the value of or income generated by the bond assets, or
iii
determined in some other way,
g
if the amount of the additional payments is not fixed at the beginning of the bond term, the reference in subsection (1)(e) to the amount of the additional payments is a reference to the maximum amount of the additional payments,
h
the amount of the redemption payment may (but need not) be subject to reduction in the event of a fall in the value of the bond assets or in the rate of income generated by them,
...
and
i
entitlement to the redemption payment may (but need not) be capable of being satisfied (whether or not at the option of the bond-issuer or the bond-holder) by the issue or transfer of shares or other securities.
j. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
k. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2A
In subsection (1)—
- “regulated recognised stock exchange” means a recognised stock exchange that is regulated in the United Kingdom, the European Economic Area or Gibraltar;
- “multilateral trading facility” means—
  1. a UK multilateral trading facility within the meaning given by Article 2.1(14A) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments,
  2. an EU multilateral trading facility within the meaning given by Article 2.1(14B) of that Regulation, and
  3. a Gibraltar multilateral trading facility within the meaning given by Article 26(11)(b)(ii) of that Regulation.
...
3
This section is subject to section 564H (provision not at arm's length: exclusion of arrangements from sections 564C to 564F and this section).
Words in s. 564G(1)(h) inserted (with effect in accordance with s. 34(4) of the amending Act) by Finance Act 2018 (c. 3), s. 34(2)(a)
S. 564G(2)(j) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 15(7)(b)(ii) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
S. 564G(2A) inserted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 15(7)(c) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
Word in s. 564G(2)(h) inserted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 15(7)(b)(i) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
Pt. 10A inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 2 para. 2 (with Sch. 9 paras. 1-9, 22)
Words in s. 564G(2A) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) (No. 2) Regulations 2019 (S.I. 2019/818), regs. 1(3), 6(3)(b); 2020 c. 1, Sch. 5 para. 1(1)
Word in s. 564G(2)(h) omitted (with effect in accordance with s. 34(4) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 34(2)(b)(i)
Words in s. 564G(1)(h) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 15(7)(a) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
Words in s. 564G(2A) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) (No. 2) Regulations 2019 (S.I. 2019/818), regs. 1(3), 6(3)(a); 2020 c. 1, Sch. 5 para. 1(1)
S. 564G(2)(k) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 15(7)(b)(ii) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
S. 564G inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 2 para. 8 (with Sch. 9 paras. 1-9, 22)
S. 564C and cross-heading inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 2 para. 4 (with Sch. 9 paras. 1-9, 22)