Income and Corporation Taxes Act 1988

[F1 807A Disposals and acquisitions of company loan relationships with or without interest. U.K.

(1) This Part shall have effect for the purposes of corporation tax in relation to any company as if tax falling within subsection (2) below were to be disregarded.

(2) [F2 Subject to subsection (2A) below,] tax falls within this subsection in relation to a company to the extent that it is—

(a) tax under the law of a territory outside the United Kingdom; and

(b) is attributable, on a just and reasonable apportionment,

[F3 (i)] to interest accruing under a loan relationship at a time when the company is not a party to the relationship [F4 ; or

(ii) to so much of a [F5 relevant payment] as, on such an apportionment, is attributable to a time when the company is not a party to [F6 the derivative contract concerned]].

[F7 (2A) Tax attributable to interest accruing to a company under a loan relationship does not fall within subsection (2) above if—

(a) at the time when the interest accrues, that company has ceased to be a party to that relationship by reason of having made the initial transfer under or in accordance with any repo or stock-lending arrangements relating to that relationship; and

(b) that time falls during the period for which those arrangements have effect.]

[F8 (2B) F9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3) F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) F11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F13 [F14 (6A) In this section “repo or stock-lending arrangements” means—

(a) a debtor repo within the meaning of [F15 Chapter 10 of Part 6 of CTA 2009 (see section 548 of that Act)], or

(b) a stock lending arrangement within the meaning of section 263B of the 1992 Act.

(6B) In any case where a debtor repo within the meaning of that paragraph constitutes the repo or stock-lending arrangements—

(a) a reference in this section, in relation to those arrangements, to the initial transfer is to the sale mentioned in condition C of that paragraph; and

(b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the subsequent purchase mentioned in condition D of that paragraph takes place and the time when it becomes apparent that that subsequent purchase will not take place.

(6C) In any case where a stock lending arrangement within the meaning of section 263B of the 1992 Act constitutes the repo or stock-lending arrangements—

(a) a reference in this section, in relation to those arrangements, to the initial transfer is to the transfer mentioned in subsection (1)(a) of that section; and

(b) a reference in this section, in relation to those arrangements, to the period for which they have effect is to the period from the making of the initial transfer until the earlier of the time when the transfer mentioned in subsection (1)(b) of that section takes place and the time when it becomes apparent that that transfer will not take place.]]

(7) In this section—

• F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• [F17 “relevant payment” means a payment the amount of which falls to be determined (wholly or mainly) by applying to a notional principal amount specified in a derivative contract, for a period so specified, a rate the value of which at all times is the same as that of a rate of interest so specified;]

• [F18 F19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ] and

• F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F1 S. 807A inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 46 (with Sch. 15)

F2 Words in s. 807A(2) inserted (with effect in accordance with s. 91(6) of the amending Act) by Finance Act 1997 (c. 16), s. 91(2)

F3 Words in s. 807A(2)(b) renumbered as s. 807A(2)(b)(i) (with effect in accordance with Sch. 30 para. 24(4) of the amending Act) by virtue of Finance Act 2000 (c. 17), Sch. 30 para. 24(2)

F4 S. 807A(2)(b)(ii) and preceding word inserted (with effect in accordance with Sch. 30 para. 24(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 24(2)

F5 Words in s. 807A(2)(b)(ii) substituted (with effect in accordance with s. 83(3) of the amending Act) by Finance Act 2002 (c. 23), Sch. 27 para. 12(2)(a) (with Sch. 28)

F6 Words in s. 807A(2)(b)(ii) substituted (with effect in accordance with s. 83(3) of the amending Act) by Finance Act 2002 (c. 23), Sch. 27 para. 12(2)(b) (with Sch. 28)

F7 S. 807A(2A) inserted (with effect in accordance with s. 91(6) of the amending Act) by Finance Act 1997 (c. 16), s. 91(3)

F8 S. 807A(2B) inserted (with effect in accordance with Sch. 7 para. 5(3) of the amending Act) by Finance (No. 2) Act 2005 (c. 22), Sch. 7 para. 5(2)

F9 S. 807A(2B) omitted (22.4.2009) by virtue of Finance Act 2009 (c. 10), Sch. 24 paras. 9(a), 12

F10 S. 807A(3) omitted (with effect in accordance with Sch. 22 para. 2(3) of the repealing Act) by virtue of Finance Act 2008 (c. 9), Sch. 22 para. 2(1)

F11 S. 807A(4)(5)(b) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 10 para. 16(3)(g), Sch. 27 Pt. 2(10), Note

F12 S. 807A(5)(6) omitted (with effect in accordance with Sch. 22 para. 2(3) of the repealing Act) by virtue of Finance Act 2008 (c. 9), Sch. 22 para. 2(2)(a)

F13 S. 807A(6A) inserted (19.3.1997) by Finance Act 1997 (c. 16), s. 91(5)

F14 S. 807A(6A)-(6C) substituted for s. 807A(6A) (with effect in accordance with S.I. 2007/2483, art. 4) by Finance Act 2007 (c. 11), Sch. 14 para. 10

F15 Words in s. 807A(6A) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 256(3) (with Sch. 2 Pts. 1, 2)

F16 S. 807A(7): definitions of "related transaction" and "trading credit" omitted (with effect in accordance with Sch. 22 para. 2(3) of the repealing Act) by virtue of Finance Act 2008 (c. 9), Sch. 22 para. 2(2)(a)

F17 S. 807A(7): definition of "relevant payment" inserted (with effect in accordance with s. 83(3) of the amending Act) by Finance Act 2002 (c. 23), Sch. 27 para. 12(3) (with Sch. 28)

F18 S. 807A(7): definition of "relevant qualifying payment" inserted (with effect in accordance with Sch. 30 para. 24(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 24(3)

F19 S. 807A(7): definition of "relevant qualifying payment" repealed (with effect in accordance with s. 83(3) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 27 para. 12(4), Sch. 40 Pt. 3(13), Note (with Sch. 28)