263EStructured finance arrangements

1

This section applies if—

a

section 774B of the Taxes Act (disregard of intended effects of arrangement involving disposals of assets) applies in relation to a structured finance arrangement,

b

the borrower or a person connected with the borrower makes a disposal of any security at any time under the arrangement to or for the benefit of the lender or a person connected with the lender, and

c

condition A or B is met.

2

Condition A is that the person making the disposal subsequently acquires under the arrangement the asset disposed of by that disposal.

3

Condition B is that—

a

the asset disposed of by that disposal subsequently ceases to exist at any time, and

b

that asset was held by the lender, or a person connected with the lender, from the time of the disposal until that time.

4

The disposal of the security by the borrower or a person connected with the borrower is to be disregarded for the purposes of this Act.

5

Any subsequent acquisition by the person making the disposal of the asset disposed of by that disposal is to be disregarded for the purposes of this Act.

6

In this section—

• “the borrower”, in relation to a structured finance arrangement, means the person who is the borrower under the arrangement for the purposes of section 774A of the Taxes Act,

• “the lender”, in relation to a structured finance arrangement, means the person who is the lender under the arrangement for the purposes of that section,

• “security” means any such asset as is mentioned in subsection (2)(c) and (d) of that section.

7

For the purposes of this section—

a

references to a person connected with the borrower do not include the lender, and

b

references to a person connected with the lender do not include the borrower.