Explanatory note

These Regulations deal with the tax consequences of a transfer (“a relevant transfer”) of any securities, or of any property, rights or liabilities, or the grant of a lease, sublease, licence or sub-licence between Northern Rock plc, or a wholly owned subsidiary, (“ACo”) and Gosforth Subsidiary No.1 plc, or a wholly owned subsidiary, (“BCo”), pursuant to an order made under the Banking (Special Provisions) Act 2008 (the Northern Rock plc Transfer Order 2009).

Regulation 1 provides for citation and commencement.

Regulation 2 provides for interpretation.

Regulation 3 provides that for the purposes of the Taxation of Chargeable Gains Act 1992 a disposal constituted by a relevant transfer is to be treated in relation to ACo and BCo, as being for a consideration such that neither a gain nor a loss accrues to the transferor. This regulation also provides that such a disposal is to be treated as one of the no gain/no loss provisions within section 288(3A) of the Taxation of Chargeable Gains Act 1992.

Regulation 4 provides that for the purposes of Part 3 of the Corporation Tax Act 2009 (“CTA 2009”) a relevant transfer of “trading assets” or “trading liabilities” is to be treated in relation to ACo and BCo, as being for a consideration such that neither a profit nor a loss accrues to the transferor. A “trading asset” is defined as an asset the proceeds of disposal of which would be brought into account under Part 3 of CTA 2009 but which is not a loan relationship, derivative contract or intangible asset. A “trading liability” is defined as a liability the payment for the assumption of which would be brought into account under Part 3 of CTA 2009 but which is not a loan relationship or derivative contract. The transfer pricing rules are excluded in relation to such a transfer.

Regulation 5 provides for continuity of treatment in relation to loan relationships transferred by a relevant transfer by providing that for the purposes of Chapter 4 of Part 5 of CTA 2009 (continuity of treatment on transfers within groups or on reorganisations), in relation to a relevant transfer, ACo and BCo are to be treated as if, for the purposes of the transfer, they were members of the same group.

Regulation 6 makes provision for the purposes of Part 8 of CTA 2009 (intangible fixed assets). Paragraph (1) provides that a relevant transfer of a chargeable intangible asset is to be treated as a tax-neutral transfer and paragraph (2) excludes the transfer pricing rules in relation to such a relevant transfer. Paragraph (3) makes provision so that Part 8 does not apply in relation to transferred intangible assets which were pre-FA 2002 assets in ACo’s hands.

Regulation 7 provides that ACo shall continue to be treated as a bank for the purposes of section 878 of the Income Tax Act 2007 (interest paid by banks) in relation to payments of interest on any securities or liabilities issued or incurred by ACo on or before 31st December 2009 which are not transferred by a relevant transfer and to which section 878 applied or would have applied on or before 31st December 2009.

Regulation 8 provides that no stamp duty is chargeable on an instrument effecting or implementing a relevant transfer.

Regulation 9 provides that no stamp duty reserve tax is chargeable on an agreement to transfer chargeable securities made in relation to, or in connection with, or by or under, the Northern Rock plc Transfer Order 2009.

A full Impact Assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.