Income Tax Act 2007

Repos

593 No tax credits for interim holder under repo

(1) This section applies if—

(a) there is a repo in respect of UK shares,

(b) under the repo, the original owner has transferred the UK shares to the interim holder,

(c) a qualifying distribution is made to the interim holder,

(d) the qualifying distribution is, or is a payment representative of, a dividend in respect of the UK shares, and

(e) a manufactured dividend representative of the dividend is paid by the interim holder in respect of any UK shares in respect of which the repo is made.

(2) The interim holder is not entitled to a tax credit under section 397(1) of ITTOIA 2005 (tax credits for qualifying distributions) in respect of the distribution.

(3) If the interim holder is UK resident, section 399(2) of ITTOIA 2005 (recipients of qualifying distributions treated as having paid income tax at dividend ordinary rate on them) does not apply in respect of the distribution.

594 No tax credits for original owner under repo

(1) This section applies if—

(a) there is a repo in respect of UK shares,

(b) under the repo, the original owner has transferred the UK shares to the interim holder,

(c) a qualifying distribution is made,

(d) the qualifying distribution is a manufactured dividend paid under the repo in respect of the UK shares by the interim holder to the original owner, and

(e) the repo is not such that the actual dividend which the manufactured dividend represents is receivable by a person other than the original owner.

(2) The original owner is not entitled to a tax credit under section 397(1) of ITTOIA 2005 (tax credits for qualifying distributions) in respect of the distribution.

(3) If the original owner is UK resident, section 399(2) of ITTOIA 2005 (recipients of qualifying distributions treated as having paid income tax at dividend ordinary rate on them) does not apply in respect of the distribution.