Part 12

Accrued income profits
Chapter 2

Accrued income profits and losses

Further transactions treated as transfers

New securities issued with extra return
649
1
This section applies if—
a
securities (“old securities”) of a particular kind are issued by way of an original issue of securities of that kind,
b
on a later occasion securities (“new securities”) of the same kind are issued,
c
a sum (“the extra return”) is payable in respect of the new securities by the issuer of them to reflect the fact that interest is accruing on the old securities,
d
the issue price of the new securities includes an element (whether or not separately identified) representing payment for the extra return, and
e
the extra return is equal to the amount of interest mentioned in subsection (2).
2
The amount of interest referred to in subsection (1)(e) is—
a
the amount of interest payable for the relevant period on so many old securities as there are new, or
b
if there are more new securities than old, the amount of interest which would be so payable if there were as many old securities as new.
3
This section does not apply if the new securities are variable rate securities.
4
The new securities are treated as transferred with accrued interest to the person to whom they are issued on the new issue day.
5
But no one is treated as the transferor.
6
For the purposes of this Chapter, the settlement day for the transfer is taken to be the new issue day.
7
See section 662 for the amount of the payment treated as made in the case of the transfer.
8
In this section—
- “the relevant period” is the period beginning with the day after—
  1. the only or last interest payment day before the new issue day, or
  2. if there is no interest payment day before the new issue day, the day on which the old securities are issued,
and ending with the new issue day, and
- “the new issue day” is the day on which the new securities are issued.