Finance Act 2006

Multiple holders of securities subject to sale and repurchase agreement: no relief for deemed manufactured payments

5 (1) Section 737A of ICTA (sale and repurchase of securities: deemed manufactured payments) is amended as follows.

(2) In subsection (5) (application of Schedule 23A and dividend manufacturing regulations), after “apply” insert “, subject to subsection (5A) below,”.

(3) After that subsection insert—

“(5A) If the relevant person is not the person to whom the transferor agreed to sell the securities, the relevant person is not entitled, by virtue of anything in Schedule 23A or any provision of dividend manufacturing regulations, or otherwise—

(a) to any deduction in computing profits or gains for the purposes of income tax or corporation tax, or

(b) to any deduction against total income or total profits,

by virtue of subsection (5) above.

Where the relevant person is a company, an amount may not be surrendered by way of group relief if a deduction in respect of it is prohibited by this subsection.”.

(4) In subsection (6) (interpretation), for—

(a) “subsection (5) above”, and

(b) “that subsection”,

substitute “this section”.

(5) The amendments made by this paragraph have effect in relation to securities if—

(a) the agreement to sell them was made on or after 27th June 2006, or

(b) a person other than the person to whom the transferor agreed to sell them became the relevant person in consequence of any other agreement made on or after that date.