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(1)Subsection (2) below applies where the debt on an accrued income security—
(a)is a qualifying debt at the end of the day immediately preceding the commencement date;
(b)becomes such a debt on any day after that date;
(c)ceases to be such a debt on any such day; or
(d)is such a debt at the end of the last day of any accounting period of the resident company ending after that date;
and in that subsection “the relevant day” means the day mentioned in whichever of paragraphs (a) to (d) above is applicable.
(2)For the purposes of sections 710 to 728 of the Taxes Act 1988 (accrued income scheme) the security—
(a)except in a case falling within paragraph (b) of subsection (1) above, shall be treated as transferred by the resident company with accrued interest on the relevant day;
(b)in a case falling within that paragraph where the resident company was the holder of the security on the day immediately preceding the relevant day, shall be treated as transferred by that company with accrued interest on that preceding day; and
(c)in a case falling within paragraph (c) of that subsection where the security is not a variable interest rate security, shall cease to be treated as such a security as from the end of the relevant day;
and, in relation to such a transfer, the settlement day is the day of the transfer (notwithstanding section 712).
(3)Subsection (4) below applies where the debt on an accrued income security—
(a)is a qualifying debt at the beginning of the commencement date;
(b)becomes such a debt on any day after that date;
(c)ceases to be such a debt on any such day; or
(d)is such a debt at the beginning of the first day of any accounting period of the resident company beginning after that date;
and in that subsection “the relevant day” means the day mentioned in whichever of paragraphs (a) to (d) above is applicable.
(4)For the purposes of sections 710 to 728 the security—
(a)except in a case falling within paragraph (c) of subsection (3) above, shall be treated as transferred to the resident company with accrued interest on the relevant day;
(b)in a case falling within that paragraph where the resident company is the holder of the security on the day immediately following the relevant day, shall be treated as transferred to that company with accrued interest on that following day; and
(c)in a case falling within paragraph (a) or (b) of that subsection where the security is not a variable interest rate security, shall be treated as such a security as from the beginning of the relevant day;
and, in relation to such a transfer, the settlement day is the day of the transfer (notwithstanding section 712).
(5)Any income which, apart from this subsection, would be treated as arising on any day by virtue of subsection (1)(a) or (b) above shall be treated as not arising until whichever of the following is the earliest, namely—
(a)the earliest day on which, under the terms on which the security is issued, the resident company is entitled to require it to be redeemed;
(b)the day on which the security is redeemed; and
(c)the day (if any) on which it is transferred by the resident company.
(6)Subsection (7) below applies where, in the case of a debt which is not a debt on a security, the terms of the debt are such that, if it were such a debt, the security would be an accrued income security.
(7)For the purposes of this section and sections 710 to 728, at any time when the debt is a qualifying debt—
(a)an accrued income security incorporating the terms of the debt shall be deemed to be held by the resident company, and
(b)the debt shall be deemed to be a debt on that security.
(8)Subsections (9) and (10) below shall apply where an accrued income security (including one deemed to be held by virtue of subsection (7) above) is treated by virtue of subsection (1)(c) or (d) above as transferred on any day by the resident company.
(9)In subsection (10) below “straddling period” means a period which would (by virtue of section 711(3) and (4) and apart from subsection (10) below) be in relation to the security an interest period beginning on or before and ending after the day of the transfer.
(10)For the purposes of sections 710 to 728 a straddling period is not an interest period but—
(a)the period beginning with the day on which the straddling period begins and ending with the day of the transfer is an interest period; and
(b)the period beginning with the day immediately following the day of the transfer and ending with the day on which the straddling period ends is an interest period.
(11)In this section—
“accrued income security” has the same meaning as “security” has for the purposes of sections 710 to 728;
“variable interest rate security” means a security to which section 717 (variable interest rate) applies;
and other expressions to which meanings are assigned for the purposes of those sections have the same meanings as in sections 710 to 728.
(12)In this section and sections 64 and 65 below “the commencement date” means 1st April 1993.
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