Part 6

Relationships treated as loan relationships etc
Chapter 10

Repos

Creditor repos and creditor quasi-repos

Ignoring effect on lender etc of sale of securities
545
1
This section applies if a company (“the lender”) has a creditor repo or a creditor quasi-repo.
2
For the purposes of the charge to corporation tax in respect of income of the lender arising while the arrangement is in force, the Corporation Tax Acts have effect as if—
a
the lender did not hold the securities that are initially sold for any period for which the arrangement is in force, and
b
the lender did not make in that period any payment representative of income payable in respect of the securities.
3
But subsection (2) is subject to subsections (4) and (5).
4
An amount is not to be ignored for the purposes of that charge as a result of subsection (2)(a) if—
a
it is, in accordance with generally accepted accounting practice, recognised in determining the lender’s profit or loss for that or any other period, or
b
it is taken into account in calculating the amounts which are so recognised.
5
A payment is not to be ignored for the purposes of that charge as a result of subsection (2)(b) if it is, in accordance with that practice, so recognised.
6
Nothing in subsection (5) affects the question whether (apart from that provision) the payment (or any part of it) may be deducted in calculating income for corporation tax purposes or against total profits.