F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F2Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F3Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F4Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F5Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F6Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F7Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F8Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F9Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F10Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F11Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F12Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F13Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F14S. 722A inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 40 para. 6
F15Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F16Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F17S. 724 repealed (with effect in accordance with s. 105(1) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(3), Note
Textual Amendments
F18S. 725 repealed (27.7.1993 with effect for the year 1992-93 and subsequent years of assessment) by 1993 c. 34, s. 213, Sch. 23 Pt. III(12) Note 5
Textual Amendments
F19S. 726 repealed (for the year 1991-92 and subsequent years of assessment) by Finance Act 1991 (c. 31, SIF 63:1), s. 123, Sch. 19 Pt. V, Note 6
F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F20S. 726A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 54, Sch. 12 paras. 2, 5
F21Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F22Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F23S. 727A inserted (with effect in accordance with s. 79(3) of the amending Act) by Finance Act 1995 (c. 4), s. 79(1) (with s. 79(4))
F24Ss. 710-727A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 162, Sch. 3 Pt. 1 (with Sch. 2)
M1(1)In order to obtain for the purposes of [F25Part 12 of ITA 2007 (accrued income profits)] particulars relating to securities, an inspector may by notice require a return under subsection (2) or (3) below.
(2)A member of the Stock Exchange, other than a market maker, may be required to make a return giving, in relation to any transactions effected by him in the course of his business in the period specified in the notice, such particulars as may be so specified.
F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)A person (other than a member of the Stock Exchange), who acts as an agent or broker in the United Kingdom in transactions in securities, may be required to make a return giving, in relation to any such transactions effected by him in the period specified in the notice, such particulars as may be so specified.
(4)No person shall be required under subsection (2) or (3) above to include in a return particulars of any transaction effected more than three years before the service of the notice requiring him to make the return.
(5)In order to obtain for the purposes of [F27Part 12 of ITA 2007 (accrued income profits)] particulars relating to securities, the Board or an inspector may by notice require any person in whose name any securities are registered to state whether or not he is the beneficial owner of those securities and, if he is not the beneficial owner of them or any of them, to furnish the name and address of the person or persons on whose behalf the securities are registered in his name.
(6)In this section “market maker”, in relation to securities, means a person who—
(a)holds himself out at all normal times in compliance with the rules of the Stock Exchange as willing to buy and sell securities of the kind concerned at a price specified by him; and
(b)is recognised as doing so by the Council of the Stock Exchange.
(7)The Board may by regulations provide that—
(a)subsections (2), (3) and (6)(a) above shall have effect as if references to the Stock Exchange were to any recognised investment exchange (within the meaning of the [F28Financial Services and Markets Act 2000]) or to any of those exchanges specified in the regulations; and
(b)subsection (6)(b) shall have effect as if the reference to the Council of the Stock Exchange were to the investment exchange concerned.
(8)Regulations under subsection (7) above shall apply in relation to transactions effected on or after such day as may be specified in the regulations.
[F29(9)In this section “securities” has the meaning given by section 619 of ITA 2007.]
Textual Amendments
F25Words in s. 728(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 163(2) (with Sch. 2)
F26Words in s. 728(2) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 163(3), Sch. 3 Pt. 1 (with Sch. 2)
F27Words in s. 728(5) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 163(4) (with Sch. 2)
F28Words in s. 728(7)(a) substituted (1.12.2001) by Financial Services and Markets Act 2000 (c. 8). s. 431(2), Sch. 20 para. 4(5); S.I. 2001/3538, art. 2(1)
F29S. 728(9) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 163(5) (with Sch. 2)
Modifications etc. (not altering text)
C1Ss. 710-728 modified (27.7.1993) by 1993 c. 34, s. 63(1)(2)
Ss. 710-728 modified (27.7.1993) by 1993 c. 34, s. 63(3)(4)
Ss. 710-728 modified (27.7.1993) by 1993 c. 34, s. 63(8)(10)
Ss. 710-728 modified (27.7.1993 with effect for the year 1992-93 and subsequent years of assessment) by 1993 c. 34, ss. 176(4), 184(3)
C2Ss. 710-728 modified (with effect in accordance with s. 105(1) of the modifying Act) by Finance Act 1996 (c. 8), Sch. 13 para. 11 (with Sch. 13 para. 16, Sch. 15)
C3Ss. 711-728 modified (31.7.1998) by Finance Act 1998 (c. 36), s. 161(2)(a) (with s. 161(7))
Marginal Citations
M1Source—1985 Sch.23 44(1)-(5A); 1986 Sch.17 6
F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F30S. 729 repealed (with effect in accordance with s. 159(1)(10) of the repealing Act) by Finance Act 1996 (c. 8), s. 159(1), Sch. 41 Pt. 5(21), Note; S.I. 1996/2646, art. 2
M2(1)Where in any chargeable period the owner of any [F32shares] (“the owner”) sells or transfers the right to receive any [F33distribution] payable (whether before or after the sale or transfer) in respect of the [F32shares] without selling or transferring the [F32shares], then, for all the purposes of the Tax Acts, that [F33distribution], whether it would or would not be chargeable to tax apart from the provisions of this section—
(a)shall be [F34treated as] the income of the owner or, in a case where the owner is not the beneficial owner of the [F32shares] and some other person (“a beneficiary”) is beneficially entitled to the income arising from the [F32shares], the income of the beneficiary, and
(b)shall be [F35treated as] the income of the owner or beneficiary for that chargeable period, F36. . .
(c)F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F37(2)This section does not have effect in relation to a sale or transfer if the proceeds of the sale or transfer are chargeable to tax.]
[F38(2A)F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
[F40(3)F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
(4)Where—
(a)the [F32shares] are of such a character that the [F33distribution] payable in respect thereof may be paid without deduction of income tax, and
(b)the owner or beneficiary does not show that the proceeds of any sale or other realisation of the right to receive the [F33distribution] which is deemed to be his income by virtue of this section have been charged to [F42income tax under Chapter 13 of Part 4 of ITTOIA 2005 (sales of foreign dividend coupons)],
[F43then that [F44distribution] shall be charged to income tax.
(4A)The income tax chargeable by virtue of subsection (4) above shall, subject to subsection (5) below, be charged on the full amount of the [F45distribution] in the year of assessment.
(4B)The person liable for any tax chargeable by virtue of subsection (4) above is the owner or beneficiary, but he shall be entitled to credit for any tax which the [F46distribution] is shown to have borne.]
(5)[F47But], in any case where, if the [F33distribution] had been [F48relevant foreign income], the computation of tax would have been made by reference to the amount received in the United Kingdom, [F49the income tax chargeable by virtue of subsection (4) above] shall be computed on the full amount of the sums which have been or will be received in the United Kingdom in the year of assessment or any subsequent year in which the owner remains the owner of the [F32shares].
(6)In relation to corporation tax, subsections (4) and (5) above shall not apply but, subject to the provisions of the Tax Acts about distributions, the owner or beneficiary shall, in respect of any [F33distribution] which is deemed to be his income by virtue of this section, be chargeable to corporation tax under Case VI of Schedule D unless he shows that the proceeds of any sale or other realisation of the right to receive that [F33distribution] have been charged to tax [F50by virtue of section 18(3B)].
[F51(7)In this section—
“distribution”, in relation to shares in a company,—
has the same meaning as it has in the Corporation Tax Acts (see section 209), but
also includes any amount that would be a distribution if the company paying it were resident in the United Kingdom;
“” means shares in a company.]
(8)The Board may by notice require any person to furnish them within such time as they may direct (not being less than 28 days), in respect of all [F32shares] of which he was the owner at any time during the period specified in the notice, with such particulars as they consider necessary for the purposes of this section F52. . . .
Textual Amendments
F31S. 730 heading substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by virtue of Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(12)
F32Words in s. 730 substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(2)(b)
F33Words in s. 730 substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(2)(a)
F34Words in s. 730(1)(a) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(3)(a)
F35Words in s. 730(1)(b) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(3)(b)
F36S. 730(1)(c) repealed (with effect in accordance with Sch. 7 para. 2(13) of the repealing Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(3)(c), Sch. 11 Pt. 2(8), Note
F37S. 730(2) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(4)
F38S. 730(2A) inserted (with effect in accordance with s. 82(2) of the amending Act) by Finance Act 2002 (c. 23), Sch. 25 para. 51
F39S. 730(2A) repealed (with effect in accordance with Sch. 7 para. 2(13) of the repealing Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(5), Sch. 11 Pt. 2(8), Note
F40S. 730(3) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(6)
F41S. 730(3) repealed (with effect in accordance with Sch. 6 para. 2(3) of the repealing Act) by Finance Act 2006 (c. 25), Sch. 6 para. 2(2), Sch. 26 Pt. 3(12), Note
F42Words in s. 730(4)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 300(3)(a) (with Sch. 2)
F43Words in s. 730(4) and s. 730(4A)(4B) substituted for words in s. 730(4) (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 300(3)(b) (with Sch. 2)
F44Word in s. 730(4) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(7)
F45Word in s. 730(4A) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(8)
F46Word in s. 730(4B) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(9)
F47Word in s. 730(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 300(4)(a) (with Sch. 2)
F48Words in s. 730(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 300(4)(b) (with Sch. 2)
F49Words in s. 730(5) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 300(4)(c) (with Sch. 2)
F50Words in s. 730(2)(4)(b)(6)(8) substituted (with effect in accordance with Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), Sch. 7 para. 23 (with Sch. 7 paras. 33-35)
F51S. 730(7) substituted (with effect in accordance with Sch. 7 para. 2(13) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(10)
F52Words in s. 730(8) repealed (with effect in accordance with Sch. 7 para. 2(13) of the repealing Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 2(11), Sch. 11 Pt. 2(8), Note
Marginal Citations
M2Source—1970 s.470; 1971 Sch.6 71
F54. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F53Ss. 730A, 730B inserted (with effect in accordance with s. 80(5) of the amending Act) by Finance Act 1995 (c. 4), s. 80(1)
F54Ss. 730A, 730B repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 4, Sch. 27 Pt. 2(14), Note
F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F53Ss. 730A, 730B inserted (with effect in accordance with s. 80(5) of the amending Act) by Finance Act 1995 (c. 4), s. 80(1)
F55Ss. 730A, 730B repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 4, Sch. 27 Pt. 2(14), Note
F57. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F56S. 730BB inserted (with effect in accordance with Sch. 38 para. 21(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 38 para. 12
F57S. 730BB repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 5, Sch. 27 Pt. 2(14), Note
F59. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F58S. 730C inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 40 para. 7
F59S. 730C repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 301, Sch. 3 (with Sch. 2)
M3(1)In this section “the relevant provisions” means sections 732, 733, 734 and this section.
(2)[F60Subject to subsections (2A) to (10) below], the relevant provisions [F61apply] to cases of a purchase by a person (“the first buyer”) of any securities and their subsequent sale by him, the result of the transaction being that interest becoming payable in respect of the securities (“the interest”) is receivable by the first buyer.
[F62(2A)The relevant provisions do not apply where the first buyer is required under the arrangements for the purchase of the securities to make to the person from whom he purchased the securities, not later than the date on which he subsequently sells the securities, a payment of an amount representative of the interest, or is treated by virtue of F63. . . [F64section 602(1) of ITA 2007][F65or paragraph 13(1) of Schedule 13 to the Finance Act 2007] as required to make such a payment.]
[F66(2B)Subject to subsection (2E) below, where there is a repo agreement in relation to any securities—
(a)neither—
(i)the purchase of the securities by the interim holder from the original owner, nor
(ii)the repurchase of the securities by the original owner,
shall be a purchase of those securities for the purposes of subsection (2) above; and
(b)neither—
(i)the sale of the securities by the original owner to the interim holder, nor
(ii)the sale by the interim holder under which the securities are bought back by the original owner,
shall be taken for the purposes of subsection (2) above to be a subsequent sale of securities previously purchased by the seller.
(2C)Accordingly, where there is a repo agreement, the securities repurchased by the original owner shall be treated for the purposes of subsection (2) above (to the extent that that would not otherwise be the case) as if they were the same as, and were purchased by the original owner at the same time as, the securities sold by him to the interim holder.
(2D)For the purposes of subsections (2B) and (2C) above there is a repo agreement in relation to any securities if there is an agreement in pursuance of which a person (“the original owner”) sells the securities to another (“the interim holder”) [F67and the original owner—
(a)is required to buy them back in pursuance of an obligation imposed by, or in consequence of the exercise of an option acquired under, that agreement or any related agreement,
(b)acquires an option to buy them back under that agreement or any related agreement which he subsequently exercises, or
(c)under that agreement or any related agreement, is entitled], in pursuance of any obligation arising on a person’s becoming entitled to receive an amount in respect of the redemption of those securities, to receive from the interim holder an amount equal to the amount of the entitlement.
(2E)Subsections (2B) and (2C) above do not apply if—
(a)the agreement or agreements under which the arrangements are made for the sale and repurchase of the securities are not such as would be entered into by persons dealing with each other at arm’s length; or
(b)any of the benefits or risks arising from fluctuations, before the securities are repurchased, in the market value of the securities in question accrues to or falls on the interim holder.
[F68(2F)For the purposes of subsections (2B) to (2E) above—
(a)agreements are related if they are entered into in pursuance of the same arrangement (regardless of the date on which either agreement is entered into); and
(b)references to buying back securities include buying similar securities even if the securities bought have not previously been held by the purchaser (and references in those subsections to repurchase are to be construed accordingly).
(2G)For the purposes of subsection (2F) above securities are similar if they entitle their holders to—
(a)the same rights against the same persons as to capital, interest and dividends, and
(b)the same remedies for the enforcement of those rights,
in spite of any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred.]]
(3)The relevant provisions do not [F69apply] where—
(a)the time elapsing between the purchase by the first buyer and his taking steps to dispose of the securities exceeded six months, or
(b)that time exceeded one month and [F70the purchase and sale were each effected at the current market price, and] the sale was not effected in pursuance of an agreement or arrangement made before or at the time of the purchase.
F71. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)The reference in subsection (3) above to the first buyer taking steps to dispose of the securities shall be construed—
(a)if he sold them in the exercise of an option he had acquired, as a reference to his acquisition of the option,
(b)in any other case, as a reference to his selling them.
[F72(4A)For the purposes of subsection (3) above, where a purchase or sale is effected as a direct result of the exercise of a qualifying option, it shall be treated as effected at the current market price if the terms under which the first buyer acquired the option, or, as the case may be, became subject to it, were arm’s length terms.
(4B)For the purposes of subsection (4A) above an option is a “qualifying option” if it would be a traded option or financial option as defined in subsection [F73(8) of section 144 of the 1992 Act]] were the reference in paragraph (b) of that subsection to the time of the abandonment or other disposal a reference to the time of exercise.
(4C)In subsection (4A) above the reference to arm’s length terms is to terms—
(a)agreed between persons dealing at arm’s length, or
(b)not so agreed, but nonetheless such as might reasonably be expected to have been agreed between persons so dealing.
(5)For the purposes of the relevant provisions, a sale of securities similar to, and of the like nominal amount as, securities previously bought (“the original securities”) shall be equivalent to a sale of the original securities, and subsection (4) above shall apply accordingly; and where the first buyer bought parcels of similar securities at different times a subsequent sale of any of the securities shall, so far as may be, be related to the last to be bought of the parcels, and then to the last but one, and so on.
(6)A person shall be under no greater liability to tax by virtue of subsection (5) above than he would have been under if instead of selling the similar securities he had sold the original securities.
(7)Where at the time when a trade is, or is deemed to be, set up and commenced [F74, or when a trade is subject to a relevant change,] any securities form part of the trading stock belonging to the trade, those securities shall be treated for the purposes of this section—
(a)as having been sold at that time in the open market by the person to whom they belonged immediately before that time, and
(b)as having been purchased at that time in the open market by the person thereafter engaged in carrying on the trade.
[F75(7A)For the purposes of subsection (7) above a trade is subject to a relevant change—
(a)when there is a change in the persons carrying on the trade which involves all of the persons carrying it on before the change permanently ceasing to carry it on, or
(b)when a company starts to be within the charge to income tax under Chapter 2 of Part 2 of ITTOIA 2005 in respect of the trade.]
(8)Subject to subsection (7) above, where there is a change in the persons engaged in carrying on a trade which is not a change on which the trade is deemed to be discontinued, the provisions of this section shall apply in relation to the person so engaged after the change as if anything done to or by his predecessor had been done to or by him.
(9)M4For the purposes of the relevant provisions—
“interest” includes a qualifying distribution and any dividend which is not a qualifying distribution F76. . . ;
“person” includes any body of persons, and references to a person entitled to any exemption from tax include, in a case of an exemption expressed to apply to income of a trust or fund, references to the persons entitled to make claims for the granting of that exemption;
“securities” includes stocks and shares, except securities which are securities [F77within the meaning of Chapter 2 of Part 12 of ITA 2007 (accrued income profits)].
[F78(9A)In applying references in the relevant provisions to interest in relation to a qualifying distribution F79. . . —
(a)“gross interest” means the qualifying distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it, and
(b)“net interest” means the qualifying distribution exclusive of any such tax credit.
(9B)F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9C)F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9D)F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
(10)For the purposes of the relevant provisions, securities shall be deemed to be similar if they entitle their holders to the same rights against the same persons as to capital and interest and the same remedies for the enforcement of those rights, notwithstanding any difference in the total nominal amounts of the respective securities or in the form in which they are held or the manner in which they can be transferred; and for the purposes of this subsection, rights guaranteed by the Treasury shall be treated as rights against the Treasury.
Textual Amendments
F60Words in s. 731(2) substituted (with effect in accordance with s. 81(4) of the amending Act) by Finance Act 1995 (c. 4), s. 81(3)(a)
F61Word in s. 731(2) substituted (with effect in accordance with s. 81(4) of the amending Act) by Finance Act 1995 (c. 4), s. 81(3)(a)
F62S. 731(2A) inserted (with effect in accordance with s. 81(4) of the amending Act) by Finance Act 1995 (c. 4), s. 81(2)
F63Words in s. 731(2A) repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 6(2)(a), Sch. 27 Pt. 2(14), Note
F64Words in s. 731(2A) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 167(2) (with Sch. 2)
F65Words in s. 731(2A) inserted (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 6(2)(b)
F66S. 731(2B)-(2F) inserted (with application in accordance with s. 77(2) of the amending Act) by Finance Act 1997 (c. 16), s. 77(1)
F67Words in s. 731(2D) substituted (with effect in accordance with Sch. 38 para. 21(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 38 para. 6
F68S. 731(2F)(2G) substituted for s. 731(2F) (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 6(3)
F69Word in s. 731(3) substituted (with effect in accordance with s. 81(4) of the amending Act) by Finance Act 1995 (c. 4), s. 81(3)(b)
F70Words in s. 731(3)(b) substituted (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 36(a)
F71Words in s. 731(3) repealed (with effect in accordance with s. 134(2) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 20 para. 36(b), Sch. 41 Pt. 5(10), Note
F73Words in s. 731(4B) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(40) (with ss. 60, 101(1), 171, 201(3))
F74Words in s. 731(7) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 302(a) (with Sch. 2)
F75S. 731(7A) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 302(b) (with Sch. 2)
F76S. 731(9): words in definition of "interest" repealed (3.5.1994) by Finance Act 1994 (c. 9), Sch. 16 para. 17(2), Sch. 26 Pt. 5(16)
F77S. 731(9): words in definition of "securities" substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 167(3) (with Sch. 2)
F78S. 731(9A)-(9D) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 16 para. 17(3)
F79Words in s. 731(9A) repealed (with effect in accordance with Sch. 6 para. 14(4) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch 6 para. 14(2), Sch. 8 Pt. 2(11), Note
F80S. 731(9B)-(9D) repealed (with effect in accordance with Sch. 6 para. 14(4) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch 6 para. 14(3), Sch. 8 Pt. 2(11), Note
Modifications etc. (not altering text)
C4 See s.343—company reconstruction without change of ownership.
Marginal Citations
M3Source—1970 s.471(1)-(5)
M4Source—1970 s.471(6); 1973 sch.11 6; 1986 Sch.18 2(1)
M5(1)Subject to the provisions of this section, if the first buyer is engaged in carrying on a trade which consists of or comprises dealing in securities, then, in computing for any of the purposes of the Tax Acts the profits arising from or loss sustained in the trade, the price paid by him for the securities shall be reduced by the appropriate amount in respect of the interest, as determined in accordance with section 735.
[F81(1A)Subsection (1) above shall not apply if the interest receivable by the first buyer falls to be taken into account [F82either—
(a)by virtue of section 366(1) of ITTOIA 2005 in computing profits chargeable to income tax under Chapter 2 of Part 2 of that Act, or
(b)by virtue of section 95(1) of this Act in computing profits chargeable to corporation tax in accordance with the provisions of this Act applicable to Case I or II of Schedule D.]]
(2)F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F84(2A)F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
(3)F85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)Subsection (1) above shall not apply if the securities are overseas securities bought by the first buyer F86. . . in the ordinary course of his trade as a dealer in securities and the following conditions are satisfied, namely—
(a)the interest is brought into account in computing for the purposes of the Tax Acts the profits arising from or loss sustained in the trade, and
(b)where credit against tax would fall to be allowed in respect of the interest under section 788 or 790, the first buyer elects that credit shall not be so allowed.
[F87In this subsection “overseas securities” means securities issued—
(a)by a government or public or local authority of a territory outside the United Kingdom; or
(b)by any other body of persons not resident in the United Kingdom.]
(5)F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F89(5A)F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
(6)F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F90(7)F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F81S. 732(1A) inserted (with effect in accordance with s. 26(8) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 26(2)
F82Words in s. 732(1A) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 303 (with Sch. 2)
F83S. 732(2)(2A) repealed (with effect in accordance with s. 26(8) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), s. 26(3), Sch. 8 Pt. 2(8), Note 2
F84S. 732(2A) inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 56(1)
F85S. 732(3) repealed (with effect in accordance with s. 159(1) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(21), Note; S.I. 1996/2646, art. 2
F86Words in s. 732(4) repealed (with effect in accordance with s. 26(8) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), s. 26(3), Sch. 8 Pt. 2(8), Note 2
F87S. 732(4): definition of "overseas securities" substituted (with effect in accordance with s. 26(8) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 26(5)
F88S. 732(5)-(7) repealed (with effect in accordance with s. 26(8) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), s. 26(6)(7), Sch. 8 Pt. 2(8), Note 2
F89S. 732(5A) inserted (retrospectively) by Finance Act 1990 (c. 29), s.53(1)
Marginal Citations
M5Source—1970 s.472; 1982 s.57; 1986 Sch.18 1, 3
M6(1)If the first buyer is entitled under any enactment to an exemption from tax which, apart from this subsection, would extend to the interest, then the exemption shall not extend to an amount equal to the appropriate amount in respect of the interest, as determined in accordance with section 735.
(2)F91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F91S. 733(2) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 168, Sch. 3 Pt. 1 (with Sch. 2)
Marginal Citations
M6Source—1970 s.473
M7(1)If the first buyer carries on a trade not falling within section 732, then in ascertaining whether any or what repayment of income tax is to be made to him under [F92section 64 or 72 of ITA 2007] by reference to any loss sustained in the trade and the amount of his income for the year of assessment his income for which includes the interest, there shall be left out of account—
(a)the appropriate amount in respect of the interest, as determined in accordance with section 735, and
(b)any tax paid on that amount.
(2)Where the first buyer is a company which does not carry on a trade falling within section 732—
(a)the appropriate amount in respect of the interest, as determined in accordance with section 735(2), and
(b)any tax paid in respect of or deducted from that amount,
shall be disregarded except that, for the purposes of corporation tax on chargeable gains, the appropriate proportion of the net interest receivable by the first buyer as mentioned in section 735(2) shall be treated as if it were a capital distribution within the meaning of section [F93122(5)(b) of the 1992 Act] received in respect of the holding of the securities concerned.
(3)In applying references in this section to interest in relation to a qualifying distribution, references to any tax paid on or in respect of an amount shall be construed as references to so much of any related tax credit as is attributable to that amount; and for this purpose “”, in relation to an amount, means the tax credit to which the recipient of the distribution of which that amount is a proportion is entitled.
Textual Amendments
F92Words in s. 734(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 169 (with Sch. 2)
F93Words in s. 734(2) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(41) (with ss. 60, 101(1), 171, 201(3))
Marginal Citations
M7Source—1970 s.474; 1973 Sch.11 7; 1979(C) Sch.7; 1978 s.30(7)
M8(1)For the purposes of section 732 the appropriate amount in respect of the interest is the appropriate proportion of the net interest receivable by the first buyer.
(2)For the purposes of sections 733 and 734 the appropriate amount in respect of the interest is the gross amount corresponding with the appropriate proportion of the net interest receivable by the first buyer.
(3)For the purposes of this section the appropriate proportion [F94, in relation to securities listed in the Official List of the Stock Exchange,] is the proportion which—
(a)the period beginning with the date on which the securities were [F95, in accordance with announcements made by The Stock Exchange, first to be dealt in without carrying rights to] the interest payment last payable before the interest receivable by the first buyer, and ending with the day before the day on which the first buyer bought the securities, bears to—
(b)the period beginning with that date and ending with the day before the first date after the purchase by the first buyer on which the securities are [F96, in accordance with such announcements, first to be dealt in without carrying rights to] the interest receivable by the first buyer.
(4)Where the interest receivable by the first buyer was the first interest payment payable in respect of the securities, paragraphs (a) and (b) of subsection (3) above shall have effect with the substitution, for references to the date on which the securities were first [F97to be dealt in] as mentioned in paragraph (a), of the beginning of the period for which the interest was payable; except that where the capital amount of the securities was not fully paid at the beginning of that period and one or more instalments of capital were paid during that period—
(a)the interest shall be treated as divided into parts, calculated by reference to the amount of the interest attributable to the capital paid at or before the beginning of that period and the amount thereof attributable to each such instalment, and
(b)treating each of those parts as interest payable for that period or, where the part was calculated by reference to any such instalment, as interest payable for the part of that period beginning with the payment of the instalment, there shall be calculated, in accordance with the preceding provisions of this section, the amount constituting the appropriate proportion of each part, and
(c)the appropriate proportion of the interest for the purposes of this section shall be the proportion thereof constituted by the sum of those amounts.
(5)In relation to securities not listed in the [F98Official List of The Stock Exchange], subsection (3) above shall have effect [F99as it has effect in relation to securities which are so listed but] with the substitution for the periods therein mentioned of such periods as in the opinion of the Commissioners having jurisdiction in the matter, correspond therewith in the case of the securities in question.
Textual Amendments
F94Words in s. 735(3) inserted (with effect in accordance with Sch. 38 para 9(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 9(1)(a)
F95Words in s. 735(3)(a) substituted (with effect in accordance with Sch. 38 para. 9(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 9(1)(b)
F96Words in s. 735(3)(b) substituted (with effect in accordance with Sch. 38 para. 9(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 9(1)(c)
F97Words in s. 735(4) substituted (with effect in accordance with Sch. 38 para, 9(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 9(2)
F98Words in s. 735(5) substituted (with effect in accordance with Sch. 38 para. 9(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 9(3)(a)
F99Words in s. 735(5) inserted (with effect in accordance with Sch. 38 para. 9(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 9(3)(b)
Marginal Citations
M8Source—1970 s.475; 1973 Sch.21 7
M9(1)Subsection (2) below applies where a company has, as a dealing company, a holding in another company resident in the United Kingdom (being a body corporate), and—
(a)the holding amounts to, or is an ingredient in a holding amounting to, 10 per cent. of all holdings of the same class in that company, and
(b)a distribution is, or two or more distributions are, made in respect of the holding, and
(c)the value (at any accounting date or immediately before realisation or appropriation) of any security comprised in the holding is materially reduced below the value of the security at the time when it was acquired, and the whole or any part of this reduction is attributable to any distribution falling within paragraph (b) above;
and in relation to any security comprised in the holding, the company having the holding is in subsection (2) below referred to as “the dealing company” and so much of any reduction in the value of the security as is attributable to any distribution falling within paragraph (b) above is in that subsection referred to as “the relevant reduction”.
(2)Where this subsection applies, an amount equal to the relevant reduction in the value of a security comprised in the holding—
(a)shall, if and so long as the security is not realised or appropriated as mentioned below, be added to the value of the security for the purposes of any valuation;
(b)shall be treated, on any realisation of the security in the course of trade, as a trading receipt of the dealing company or, in the event of a partial realisation, shall be so treated to an appropriate extent, and
(c)shall be treated as a trading receipt of the dealing company if the security is appropriated in such circumstances that a profit on the sale of the security would no longer form part of the dealing company’s trading profits.
(3)References in this section to a holding in a company refer to a holding of securities by virtue of which the holder may receive distributions made by the company, but so that—
(a)a company’s holdings of different classes in another company shall be treated as separate holdings, and
(b)holdings of securities which differ in the entitlements or obligations they confer or impose shall be regarded as holdings of different classes.
(4)For the purposes of subsection (2) above—
(a)all a company’s holdings of the same class in another company are to be treated as ingredients constituting a single holding, and
(b)a company’s holding of a particular class shall be treated as an ingredient in a holding amounting to 10 per cent. of all holdings of that class if the aggregate of that holding and other holdings of that class held by connected persons amounts to 10 per cent. of all holdings of that class;
and [F100, for the purposes of paragraph (b) above, whether persons are connected is determined in accordance with section 839, but] as if, in subsection (7) of that section, after the words “or exercise control of” in each place where they occur there were inserted the words “ or to acquire a holding in ”.
(5)Where this section applies in relation to a distribution which consists of or includes interest to which section 732 applies, any reduction under that section in the price paid for the securities in respect of which the distribution is made shall be adjusted in such manner as seems appropriate to the Board to take account of subsection (2) above.
(6)For the purposes of this section “security” includes a share or other right and a company is a “dealing company” in relation to a holding if a profit on a sale of the holding would be taken into account in computing the company’s trading profits.
Textual Amendments
F100Words in s. 736(4) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 170 (with Sch. 2)
Modifications etc. (not altering text)
C5 See s.237—disallowance of reliefs in respect of bonus issues etc.
Marginal Citations
M9Source—1970 s.476
Schedule 23A to this Act shall have effect in relation to certain cases where under a contract or other arrangements for the transfer of shares or other securities a person is required to pay to the other party an amount representative of a dividend or payment of interest on the securities.]
Textual Amendments
F101S. 736A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58(1) (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg. 2(a); 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(a), 4(1))
(1)This section applies where—
(a)any interest on securities transferred by the lender under a stock lending arrangement is paid, as a consequence of the arrangement, to a person other than the lender; and
(b)no provision is made for securing that the lender receives payments representative of that interest.
(2)Where this section applies, Schedule 23A and the provisions for the time being contained in any regulations under that Schedule [F103, and section 97 of the Finance Act 1996 (loan relationships: manufactured interest),] shall apply [F104for corporation tax purposes][F105, subject to subsection (2A) below,] as if—
(a)the borrower were required under the stock lending arrangement to pay the lender an amount representative of the interest mentioned in subsection (1)(a) above;
(b)a payment were made by the borrower in discharge of that requirement; and
(c)that payment were made on the same date as the payment of the interest of which it is representative.
[F106(2A)The borrower is not entitled, by virtue of anything in Schedule 23A or any provision of regulations under that Schedule, or otherwise—
(a)to any deduction in computing profits or gains for the purposes of F107. . . corporation tax, or
(b)to any deduction against F108. . . total profits,
in respect of any such deemed requirement or payment as is provided for by subsection (2) above.
Where the borrower 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.]
(3)In this section—
“interest” includes dividends; and
“stock lending arrangement” and “securities” have the same meanings as in section 263B of the 1992 Act.
[F109(4)See section 736D for provision treating certain arrangements as stock lending arrangements for the purposes of this section.]]
Textual Amendments
F102S. 736B inserted (with effect in accordance with Sch. 10 para. 7(1) of the amending Act) by Finance Act 1997 (c. 16), Sch. 10 para. 3; S.I. 1997/991, art. 2
F103Words in s. 736B(2) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 171(2)(a) (with Sch. 2)
F104Words in s. 736B(2) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 171(2)(b) (with Sch. 2)
F105Words in s. 736B(2) inserted (with application in accordance with s. 84(4) of the amending Act) by Finance Act 2001 (c. 9), s. 84(2)
F106S. 736B(2A) inserted (with application in accordance with s. 84(4) of the amending Act) by Finance Act 2001 (c. 9), s. 84(3)
F107Words in s. 736B(2A)(a) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 171(3)(a), Sch. 3 Pt. 1 (with Sch. 2)
F108Words in s. 736B(2A)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 171(3)(b), Sch. 3 Pt. 1 (with Sch. 2)
F109S. 736B(4) inserted (with effect in accordance with Sch. 6 para. 4(4) of the amending Act) by Finance Act 2006 (c. 25), Sch. 6 para. 4(1)
Modifications etc. (not altering text)
C6S. 736B modified (19.7.2006) by Finance Act 2006 (c. 25), s. 139(1)(3)
(1)This section applies where—
(a)the borrower under a stock lending arrangement is treated under section 736B(2) as paying under that arrangement an amount representative of interest on any securities (“the relevant securities”),
(b)an amount of money (“cash collateral”) is payable to or for the benefit of the lender for the purpose of securing the discharge of the requirement to transfer the relevant securities back to the lender,
(c)the stock lending arrangement is designed to produce a return to the borrower which equates, in substance, to the return on an investment of money at interest, and
(d)the main purpose, or one of the main purposes, of the stock lending arrangement is the obtaining of a tax advantage.
(2)Where this section applies—
(a)the [F111Corporation Tax Acts] are to apply as if the borrower receives an amount of interest payable in respect of the cash collateral, and
(b)the amount of the interest is calculated in accordance with the following provisions of this section (see, in particular, subsections (3) to (7)).
(3)The interest is treated for the purposes of the [F111Corporation Tax Acts] as if it were received on the date (“the return date”) on which the borrower transfers the relevant securities back to the lender.
(4)The interest is treated for the purposes of the [F111Corporation Tax Acts] as if it were payable in respect of the period (“the interest period”)—
(a)beginning with the date on which the lender transfers the relevant securities to the borrower, and
(b)ending with the return date.
(5)The rate of interest payable in respect of the cash collateral is a rate that is reasonably comparable to the rate that the borrower could obtain by placing the cash collateral on deposit for the interest period.
(6)For the purposes of this section, the amount of the cash collateral on which the interest is payable is taken to be—
(a)in any case where the amount of the cash collateral varies at any time on or before the return date, the highest amount of the cash collateral at any time on or before the return date, and
(b)in any other case, the amount of the cash collateral as at the return date.
(7)The amount of the interest which the borrower is treated as receiving in respect of the cash collateral for the interest period is reduced (but not below nil) by any interest which the borrower actually receives in respect of that collateral for that period.
(8)F112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9)If the borrower is a company within the charge to corporation tax—
(a)the interest which the borrower is treated as receiving is treated for the purposes of Chapter 2 of Part 4 of the Finance Act 1996 (loan relationships) as payable to it on a money debt,
(b)that money debt is treated for those purposes as a relationship to which section 100 of the Finance Act 1996 applies (money debts etc not arising from the lending of money), and
(c)the credits to be brought into account for those purposes in respect of the interest must be determined using an amortised cost basis of accounting.
(10)The fact that the borrower is treated as receiving an amount of interest is not to be taken as implying that the interest is payable by the lender or any other person.
(11)For the purposes of this section—
“money” includes money expressed in a currency other than sterling,
“stock lending arrangement” and “securities” have the same meanings as in section 263B of the 1992 Act,
“tax advantage” has the meaning given by [F113section 840ZA].
(12)For the purposes of this section—
(a)any reference to the transfer of securities back has the same meaning as in section 263B of the 1992 Act (see, in particular, sections 263B(5) and 263C(1) of that Act), but
(b)if it becomes apparent that the borrower will not comply with the requirement to transfer any securities back, the borrower is treated as if he transfers them back on the date on which it becomes so apparent.
(13)For the purposes of this section it does not matter—
(a)whether the cash collateral is payable by the borrower or by any other person,
(b)whether the cash collateral is payable under the stock lending arrangement or under any other arrangement,
(c)whether collateral in another form is also provided in connection with the stock lending arrangement.
[F114(14)See section 736D—
(a)for provision treating certain arrangements as stock lending arrangements for the purposes of this section, and
(b)for provision treating certain amounts as cash collateral for those purposes.]]
Textual Amendments
F110S. 736C inserted (with effect in accordance with Sch. 6 para. 3(2)-(4) of the amending Act) by Finance Act 2006 (c. 25), Sch. 6 para. 3(1)
F111Words in s. 736C(2)(a)(3)(4) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 172(2) (with Sch. 2)
F112S. 736C(8) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 172(3), Sch. 3 Pt. 1 (with Sch. 2)
F113S. 736C(11): words in definition of "tax advantage" substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 172(4) (with Sch. 2)
F114S. 736C(14) inserted (with effect in accordance with Sch. 6 para. 4(4) of the amending Act) by Finance Act 2006 (c. 25), Sch. 6 para. 4(2)
(1)In this section “quasi-stock lending arrangement” means so much of any arrangements between two or more persons as are not stock lending arrangements, but are arrangements under which—
(a)a person (“the lender”) transfers securities to another person (“the borrower”), and
(b)a requirement is imposed on a person to transfer any or all of the securities, or any other property, back to the lender or any other person,
and it does not matter whether the person on whom that requirement is imposed is the borrower or any other person.
(2)In this section “quasi-cash collateral”, in relation to any stock lending arrangement or quasi-stock lending arrangement, means—
(a)any money which is payable for a relevant purpose, plus
(b)any other property which is transferable for a relevant purpose.
(3)Money or other property is payable or transferable for a relevant purpose if it is payable or transferable to or for the benefit of—
(a)the lender under the stock lending arrangement or quasi-stock lending arrangement, or
(b)a person connected with that lender,
for the purpose of securing the discharge of the requirement to transfer any or all of the securities, or any other property, back to that lender or any other person.
(4)For the purposes of sections 736B and 736C, a quasi-stock lending arrangement is treated as if it were a stock lending arrangement.
(5)For the purposes of section 736C, in relation to any stock lending arrangement or quasi-stock lending arrangement,—
(a)quasi-cash collateral is treated as if it were cash collateral, and
(b)the amount of the quasi-cash collateral in relation to the stock lending arrangement or quasi-stock lending arrangement is taken to be the amount of the cash collateral.
(6)If any property other than money is transferable for a relevant purpose, the amount of the quasi-cash collateral so far as relating to that property is determined by reference to its market value.
(7)In any case where—
(a)section 736C applies in relation to a quasi-stock lending arrangement, and
(b)the person for whom the tax advantage was designed to be obtained is a person (“the other person”) other than the borrower under that arrangement,
that section has effect as if the other person were the person who receives the amount of interest mentioned in that section.
(8)In any case where section 736C applies in relation to a quasi-stock lending arrangement—
(a)any reference in that section to cash collateral being payable to or for the benefit of the lender includes its being payable to or for the benefit of a person connected with the lender,
(b)the reference in subsection (1)(c) of that section to a return to the borrower includes a return to any other person, and
(c)any reference in that section to the transfer back of the relevant securities by the borrower to the lender includes the transfer back of any or all of the securities, or any other property, by any person to the lender or any other person.
(9)Section 839 (connected persons) applies for the purposes of this section.
(10)In this section—
“money” includes money expressed in a currency other than sterling,
“property” means property in any form,
“stock lending arrangement” and “securities” have the same meaning as in section 263B of the 1992 Act,
“transfer” means a transfer otherwise than by way of sale.]
Textual Amendments
F115S. 736D inserted (with effect in accordance with Sch. 6 para. 4(4) of the amending Act) by Finance Act 2006 (c. 25), Sch. 6 para. 4(3)
F116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F116S. 737 repealed (with effect in accordance with Sch. 10 para. 16(1), Sch. 18 Pt. 6(10) Notes 3, 6 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 10 para. 8, Sch. 18 Pt. 6(10) (with Sch. 10 para. 16(3)); S.I. 1997/991, art. 2
F118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F117Ss. 737A-737C inserted (3.5.1994) by Finance Act 1994 (c. 9), s. 122
F118Ss. 737A-737C repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 7, Sch. 27 Pt. 2(14), Note
F119. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F117Ss. 737A-737C inserted (3.5.1994) by Finance Act 1994 (c. 9), s. 122
F119Ss. 737A-737C repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 7, Sch. 27 Pt. 2(14), Note
F120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F117Ss. 737A-737C inserted (3.5.1994) by Finance Act 1994 (c. 9), s. 122
F120Ss. 737A-737C repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 7, Sch. 27 Pt. 2(14), Note
(1)The Treasury may by regulations provide for any manufactured payment made to any person to be treated, in such circumstances and to such extent as may be described in the regulations, as comprised in income of that person that is eligible for relief from [F122corporation] tax by virtue of section 438 F123. . . .
(2)In this section “manufactured payment” means any F124. . . manufactured interest or manufactured overseas dividend, within the meaning of Schedule 23A.]
Textual Amendments
F121Ss. 737D, 737E inserted (1.5.1995) by Finance Act 1995 (c. 4), s. 83(1)
F122Word in s. 737D(1) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 175(a) (with Sch. 2)
F123Words in s. 737D(1) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 175(b), Sch. 3 Pt. 1 (with Sch. 2)
F124Words in s. 737D(2) repealed (with effect in accordance with s. 102(10) of the repealing Act) by Finance Act 1998 (c. 36), s. 102(3), Sch. 27 Pt. 3(24), Note
Modifications etc. (not altering text)
C7S. 737D(2) modified (19.7.2006) by Finance Act 2006 (c. 25), s. 139(1)(6)
F127. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
Textual Amendments
F121Ss. 737D, 737E inserted (1.5.1995) by Finance Act 1995 (c. 4), s. 83(1)
F125S. 737E sidenote substituted (with effect in accordance with Sch. 38 para. 21(2) of the amending Act) by virtue of Finance Act 2003 (c. 14), Sch. 38 para. 13(4)
F126Words in s. 737E sidenote repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 176(4), Sch. 3 Pt. 1 (with Sch. 2)
F127S. 737E repealed (with effect in accordance with S.I. 2007/2483, art. 3) by Finance Act 2007 (c. 11), s. 47(4), Sch. 14 para. 8, Sch. 27 Pt. 2(14), Note
(1)M10The Board may by regulations provide for all or any of the following—
(a)F128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)F128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)that for section 735(3) and (5) (which refer to the Stock Exchange Daily Official List) there shall be substituted such provisions as the Board think fit to take account of recognised investment exchanges.
Regulations under this subsection shall apply where the subsequent sale is carried out by the first buyer on or after such day as is specified in the regulations.
F129(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)M11In this section “recognised investment exchange”[F131has the meaning given by section 285(1)(a) of the Financial Services and Markets Act 2000].
Textual Amendments
F128S. 738(1)(a)(b) repealed (with effect in accordance with s. 26 of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 8 Pt. 2(7), Note 2
F129S. 738(2) repealed (with effect as mentioned in s. 58(3) of the repealing Act) by Finance Act 1991 (c. 31, SIF 63:1), ss. 58(2), 123, Sch. 13 para. 4, Sch. 19 Pt. V, Note 9; S.I. 1992/1346, reg. 5
F130S. 738(3)(4) repealed (with effect in accordance with Sch. 18 Pt. 6(10) Note 3 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2
F131Words in s. 738(5) substituted (1.12.2001 with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 43
Marginal Citations
M10Source—1986 Sch.18 4
M11Source—1986 Sch.18 10(2)