Section 697 Exceptions to section 696

United Kingdom

(1)

Section 696 does not apply if A—

(a)

is a bank, building society, financial trader F1, recognised clearing house, F2recognised CSDF3... or third country central counterparty,

(b)

is a party to the derivative contract solely for the purposes of a trade or part of a trade it carries on in the United Kingdom, and

(c)

is a party to it otherwise than as agent or nominee of another person.

F4(2)

Section 696 does not apply if NR—

(a)

is chargeable to corporation tax or income tax in respect of income arising from the derivative contract (or would be if there were any such income), and

(b)

is a party to the derivative contract otherwise than as agent or nominee of another person.

(3)

Section 696 does not apply if arrangements made in relation to the territory in which NR is resident—

(a)

have effect F5under section 2(1) of TIOPA 2010 (double taxation relief), and

(b)

make provision in relation to interest (as defined in the arrangements).

(4)

It does not matter whether the provision mentioned in subsection (3)(b) is for relief or otherwise.

(5)

If NR is a party to the contract as agent or nominee of another person, subsection (3) applies as if the reference to the territory in which NR is resident were a reference to the territory in which that other person is resident.

(6)

In this section—

F6“recognised clearing house”, F7“recognised CSD”F8... and “third country central counterparty” have the meanings given by section 285 of FISMA 2000 (exemptions for recognised F9bodies).
F10...

Annotations

Textual amendments

F1: Words in s. 697(1)(a) substituted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 26(2)(a) (with regs. 52-58)
F2: Words in s. 697(1)(a) inserted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 14(a) (with regs. 7(4), 9(1))
F3: Words in s. 697(1)(a) omitted (31.12.2020) by virtue of The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/710), regs. 1(3), 5(a); 2020 c. 1, Sch. 5 para. 1(1)
F4: S. 697(2) substituted (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 21(2), 35 (with Sch. 5 para. 36)
F5: Words in s. 697(3)(a) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 93 (with Sch. 9 paras. 1-9, 22)
F6: Words in s. 697(6) substituted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 26(2)(b) (with regs. 52-58)
F7: Words in s. 697(6) inserted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 14(b)(i) (with regs. 7(4), 9(1))
F8: Words in s. 697(6) omitted (31.12.2020) by virtue of The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/710), regs. 1(3), 5(b); 2020 c. 1, Sch. 5 para. 1(1)
F9: Word in s. 697(6) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 14(b)(ii) (with regs. 7(4), 9(1))
F10: Words in s. 697(6) omitted (6.4.2020) by virtue of Finance Act 2019 (c. 1), Sch. 5 paras. 21(3), 35 (with Sch. 5 para. 36)

Notes on Part 7

Modifications

C1: Pt. 7 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)
C2: Pt. 7 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
C3: Pt. 7 modified by 2007 c. 3, s. 809FZZ(8) (as inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2))
C4: Pt. 7 modified (for the tax year 2026-27 and subsequent tax years (but in relation to investment management services whenever performed)) by 2005 c. 5, Sch. A1 para. 35(6) (as inserted by Finance Act 2026 (c. 11), s. 58(6), Sch. 11 para. 1)