Part 6Relationships treated as loan relationships etc
Chapter 10Repos
Debtor repos and debtor quasi-repos
550Ignoring effect on borrower of sale of securities
1
This section applies if a company (“the borrower”)—
a
has a debtor repo or a debtor quasi-repo, or
b
has a liability which is discharged under a relevant arrangement.
2
A relevant arrangement is one—
a
in relation to which conditions C and D in section 549 are met, and
b
the main purpose or one of the main purposes of which is the obtaining of a tax advantage.
3
For the purposes of the charge to corporation tax in respect of income of the borrower arising while the arrangement is in force, the Corporation Tax Acts apply as if—
a
the borrower held the securities which are initially sold for any period for which the arrangement is in force, and
b
the borrower did not receive in that period amounts representative of income payable in respect of the securities.
4
Subsection (3) is subject to subsections (5) F2to (6).
5
No amount is to be charged to corporation tax as a result of subsection (3)(a) unless—
a
it is, in accordance with generally accepted accounting practice, recognised in determining the borrower'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.
F15A
For the purposes of the charge to corporation tax, an amount representative of income payable in respect of the securities is not to be ignored as a result of subsection (3)(b) if—
a
it is, in accordance with generally accepted accounting practice, recognised in determining the borrower'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.
6
If the securities which are initially sold are overseas securities, the entitlement of the borrower to double taxation relief in respect of any overseas dividend payable in respect of those securities is determined as if—
a
subsection (3) were omitted,
b
the borrower received a payment of an amount which is representative of that dividend,
c
the payment were made under a requirement of the arrangement, and
d
the payment were made on the date on which that dividend is payable.
7
For the purposes of this section “double taxation relief” means any relief given under or as a result of F3Part 2 of TIOPA 2010.