(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 shall apply [F2, 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.
[F3(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 income tax or corporation tax, or
(b)to any deduction against total income or, as the case may be, 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.]
Textual Amendments
F1S. 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
F2Words 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)
F3S. 736B(2A) inserted (with application in accordance with s. 84(4) of the amending Act) by Finance Act 2001 (c. 9), s. 84(3)