SCHEDULES
F1SCHEDULE 7ACExemptions for disposals by companies with substantial shareholding
Part 2The substantial shareholding requirement
Effect of repurchase agreement
F212
1
This paragraph applies where—
a
a company (“the borrower”) which holds shares in another company sells the shares under an arrangement by reference to which the borrower has a debtor repo, and
b
by virtue of paragraph 6 of Schedule 13 to the Finance Act 2007 (sale and repurchase of securities) the sale is ignored for the purposes of corporation tax in respect of chargeable gains.
2
For the period for which the arrangement is in force—
a
the borrower shall be treated for the purposes of this Part as continuing to hold the shares and accordingly as retaining its entitlement to any rights attaching to them, and
b
the lender shall be treated for those purposes as not holding the shares and as not becoming entitled to any such rights.
This is subject to the following qualification.
3
If at any time before the end of that period the borrower, or another member of the same group as the borrower, becomes the holder—
a
of any of the shares, or
b
of any shares directly or indirectly representing any of them,
sub-paragraph (2) does not apply after that time in relation to those shares or, as the case may be, the shares represented by them.
4
Expressions used in this paragraph and in Schedule 13 to the Finance Act 2007 have the same meaning in this paragraph as in that Schedule.
Sch. 7AC inserted (with effect in accordance with s. 44(3)(4) of the amending Act) by Finance Act 2002 (c. 23), Sch. 8 para. 1