SCHEDULES
SCHEDULE 13Sale and repurchase of securities
12Repo under arrangement designed to produce quasi-interest: anti-avoidance
1
This paragraph applies if—
a
under an arrangement a person receives any money or other asset (“the advance”) from a company (or a partnership of which the company is a member),
b
the company does not have a creditor repo or creditor quasi-repo by reference to the arrangement but would have one on the applicable accounting assumption (reading condition E in paragraphs 7 and 8 in the light of that assumption),
c
the arrangement is designed to produce a return (“the quasi- interest”) to the company (or partnership of which it is a member) which equates, in substance, to the return on an investment of money at interest, and
d
the main purpose, or one of the main purposes, of the arrangement is the obtaining of a tax advantage.
2
Paragraph 10 is to have effect as if—
a
the company had a creditor repo by reference to the arrangement, and
b
the quasi-interest were an amount recorded as mentioned in sub-paragraph (4) of that paragraph.
3
In this paragraph “the applicable accounting assumption” is the assumption that, in accordance with generally accepted accounting practice, the accounts of the company (or the partnership of which it is a member) for the period in which the advance is made record a financial asset in respect of the advance.