Part VII Other property, businesses, investments etc.

Miscellaneous reliefs and exemptions

C2C4263AF1F7Agreements for sale and repurchase of securities: capital gains tax

C1C31

F3Subject to subsections (3) and (4) below, in any case falling within section 607(1) of ITA 2007 (treatment of price differences under repos)—

a

the acquisition of the securities in question by the interim holder and the disposal of those securities by him to the repurchaser, and

b

except where the repurchaser is or may be different from the original owner, the disposal of those securities by the original owner and any acquisition of those securities by the original owner as the repurchaser,

shall be disregarded for the purposes of capital gains tax.

F41A

If, at any time after the acquisition mentioned in subsection (1)(a) above, it becomes apparent that the interim holder will not dispose of the securities to the repurchaser, the interim holder shall be treated for the purposes of capital gains tax as acquiring them at that time for a consideration equal to their market value at that time.

1B

If, at any time after the disposal mentioned in subsection (1)(b) above, it becomes apparent that the original owner will not acquire the securities as the repurchaser, the original owner shall be treated for the purposes of capital gains tax as disposing of them at that time for a consideration equal to their market value at that time.

F52

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3

Subsection (1) above does not apply if—

a

the agreement or agreements under which provision is made for the sale and repurchase 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 repurchase takes place, in the market value of the securities sold accrues to, or falls on, the interim holder.

4

Subsection (1) above does not apply in relation to any disposal or acquisition of qualifying corporate bonds in a case where the securities disposed of by the original owner or those acquired by him, or by any other person, as the repurchaser are not such bonds.

F65

F2For corporation tax purposes, expressions used in this section and section 607 of ITA 2007 have the same meaning in this section as in that section.

6

This section does not apply for the purposes of corporation tax in respect of chargeable gains.