660Transfers with unrealised interest: interest in defaultU.K.
(1)This section applies if—
(a)securities are transferred with unrealised interest,
(b)there has been a failure to pay interest due on the securities transferred, and
(c)as a result of the failure, on the day of the transfer the value of the right to receive the unrealised interest (“the unrealised interest value”) is less than the unrealised interest.
(2)The amount of the payment treated as made to the transferor under section 634(2) is taken to be the unrealised interest value instead of the amount of the unrealised interest.
(3)The amount of accrued income profits under section 631(1) is taken to be the unrealised interest value instead of the amount of the unrealised interest.
(4)Subsections (2) and (3) are subject to section 661 (successive transfers with unrealised interest in default).
(5)For the purposes of this section and section 661, a person is treated as transferring securities of a particular kind which the person acquired later before securities of that kind acquired earlier.
(6)See also section 681 (exemption for unrealised interest received by transferee after transfer).