Part 11Manufactured payments and repos
Chapter 4Deemed manufactured payments
Stock lending arrangements
596Deemed manufactured payments: stock lending arrangements
1
This section applies if—
a
there is a stock lending arrangement in respect of securities,
b
a dividend or interest on the securities is paid, as a result of the arrangement, to a person other than the person who is the lender under the arrangement, and
c
no provision is made for securing that the lender receives payments representative of the dividend or interest.
2
The rules about manufactured payments apply as if the person who is the borrower under the arrangement—
a
were required, under the arrangement, to pay the lender an amount representative of the dividend or interest, and
b
discharged the requirement when the dividend or interest was paid.
3
But the borrower is not entitled (whether as a result of the rules about manufactured payments or otherwise) to an income deduction in respect of the deemed requirement to pay or the deemed payment.
4
“Income deduction” means—
a
a deduction in calculating profits or gains for income tax purposes, or
b
a deduction in calculating net income.
5
For the purposes of this section, a quasi-stock lending arrangement is treated as if it were a stock lending arrangement.