Part 12Accrued income profits
Chapter 2Accrued income profits and losses
The payments treated as made on transfers
632Payment on transfer with accrued interest
1
In the case of a transfer of securities with accrued interest, for the purposes of this Chapter a payment is treated as made by the transferee to the transferor in the interest period in which the settlement day falls.
2
The amount of that payment depends on whether the transfer is under an arrangement by which the transferee accounts to the transferor separately—
a
for the consideration for the securities, and
b
for gross interest accruing to the settlement day.
3
If the transfer is under such an arrangement, the amount of the payment is the amount of gross interest which the transferee accounts for.
4
If—
a
the transfer is not under such an arrangement, and
b
the settlement day is itself an interest payment day for the securities,
the amount of the payment is the amount of interest payable on the securities on that day.
5
If—
a
the transfer is not under such an arrangement, and
b
the settlement day is not an interest payment day for the securities,
the amount of the payment is an amount equal to—
where—
I is the interest payable on the securities on the first interest payment day after the settlement day (“the payment day”),
A is the number of days in the period beginning with the first day on which that interest accrues and ending with the settlement day, and
B is the number of days in the period beginning with the first day on which that interest accrues and ending with the payment day.
6
For the purposes of subsection (5), the first day on which that interest accrues is taken to be—
a
the day after the last interest payment day before the settlement day, or
b
if there was no interest payment day before the settlement day, the first day of the first interest period of the securities.
7
In a case where no one is treated as the transferor (see sections 648(4) and 649(5)), this section has effect as if—
a
in subsection (1) the words “to the transferor” were omitted, and
b
subsections (2), (3), (4)(a) and (5)(a) were omitted.
8
In a case where no one is treated as the transferee (see sections 621(2) and (3) and 648(2)), this section has effect as if—
a
in subsection (1) the words “by the transferee” were omitted, and
b
subsections (2), (3), (4)(a) and (5)(a) were omitted.
9
Subsections (2) to (5) are subject to section 662 (new securities issued with extra return: special rules about payments).
10
Subsections (4) and (5) are subject to section 659 (transfers with or without accrued interest: interest in default).