Explanatory note

These Regulations make provision as to the application of the Corporation Tax Acts in relation to a securitisation company.

Regulation 1 provides for citation, commencement and effect.

Regulation 2 provides for the interpretation of a number of terms used in the Regulations.

Regulation 3 sets out the scope and application of the Regulations.

Regulation 4 defines “securitisation company”. There are five different types of securitisation company – a note-issuing company, an asset-holding company, an intermediate borrowing company, a warehouse company and a commercial paper funded company. Each type must have a retained profit (as defined in regulation 10) in order to constitute a securitisation company.

Regulations 5 to 9 set out requirements for each type of securitisation company.

Regulation 10 defines retained profit.

Regulation 11 provides that specified regulations do not apply to a securitisation company which does not meet, or has not met, the payments condition. This condition essentially requires that subject to the retention of amounts required to provide for losses, expenses, creditworthiness and retained profit, all amounts received by a securitisation company must be paid out. Transitional provisions are made in relation to companies which elect that the Regulations shall apply.

Regulation 12 provides that the specified regulations do not apply to a securitisation company which has, or has had, an unallowable purpose.

Regulation 13 specifies companies to which these Regulations do not apply unless the company elects that they shall apply.

Regulation 14 provides for the charge to corporation tax.

Regulations 15 to 21 make provision for the application, modification and non-application of provisions of the Corporation Tax Acts 1988. Regulation 15 modifies section 12 of the Income and Corporation Taxes Acts 1988 (c. 1) (basis of, and periods for, assessment) so that an accounting period ends when a company ceases to be a securitisation company. Regulation 16 disapplies parts of section 209 (meaning of distribution) of that Act so only dividend payments by a securitisation company constitute “distributions” for the purposes of the Corporation Tax Acts. Regulation 17 excludes group relief provisions in relation to securitisation companies. Regulation 18 disapplies certain provisions relating to transactions within groups in the Taxation of Chargeable Gains Act 1992 (c. 12). Regulation 19 disapplies provisions in Schedule 9 to the Finance Act 1996 (loan relationships: special computational provisions) (c. 8). Regulation 20 disapplies provisions in Schedule 26 to the Finance Act 2002 (c. 23) (derivative contracts: transactions within groups). Regulation 21 disapplies section 83 of the Finance Act 2005 (application of accounting standards to securitisation companies) (c. 7).

These Regulations impose no new costs on business.