PART XVII TAX AVOIDANCE

CHAPTER II TRANSFERS OF SECURITIES

Miscellaneous provisions relating to securities

736B Deemed manufactured payments in the case of stock lending arrangements.
(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 , and section 97 of the Finance Act 1996 (loan relationships: manufactured interest), shall apply for corporation tax purposes, 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.
Words 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)
Words 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)
Words 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)
(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 . . . corporation tax, or
Words in s. 736B(2A)(a) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 171(3)(a), Sch. 3 Pt. 1 (with Sch. 2)
(b) to any deduction against . . . total profits,
Words in s. 736B(2A)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 171(3)(b), Sch. 3 Pt. 1 (with Sch. 2)
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.
S. 736B(2A) inserted (with application in accordance with s. 84(4) of the amending Act) by Finance Act 2001 (c. 9), s. 84(3)
(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.
(4) See section 736D for provision treating certain arrangements as stock lending arrangements for the purposes of this section.
S. 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)
S. 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

S. 736B modified (19.7.2006) by Finance Act 2006 (c. 25), s. 139(1)(3)