Paragraph 7 Specified financial products

(1)

The financial products to which this paragraph applies are—

(a)

a loan;

(b)

a contract which—

(i)

is a derivative contract for the purposes of Schedule 26 to the Finance Act 2002;

(ii)

would be such a derivative contract if paragraph 4 of that Schedule (contracts excluded by virtue of their underlying subject matter) were omitted; or

(iii)

would be a derivative contract falling within sub-paragraph (i) or (ii) if it were a contract of a company;

(c)

an agreement for the sale and repurchase of securities of the kind described in paragraphs (a) to (c) of subsection (1) of section 730A of ICTA 1988^f1;

(d)

a stock lending arrangement within the meaning given by section 263B(1) of the Taxation of Chargeable Gains Act 1992^f2;

(e)

a share; and

(f)

a contract, not being one of the above, which, whether alone or in combination with one or more other contracts (including any of the above), in substance represents the making of a loan, or the advancing or depositing of money, whatever its form and falls to be accounted for on that basis.

This sub-paragraph is subject to the following qualifications.

(2)

This paragraph does not apply if the only financial products involved in the arrangements are one or both of the following—

(a)

assets which are held within an account which satisfies the conditions in the Individual Savings Accounts Regulations 1998^f3; and

(b)

assets which are held as plan investments in a personal equity plan within the meaning of the Personal Equity Plan Regulations 1989^f4.

(3)

For the purposes of this paragraph, a contract, or a combination of contracts, falls to be accounted for as a loan, or as the advancing or depositing of money, if the person entering into the arrangements is, in accordance with generally accepted accounting practice, required to treat the contract, or the combination of contracts, as a loan, deposit or other financial asset or obligation (as to which, see section 43A(1) of ICTA 1988^f5), or would be so required if the person were a company to which the Companies Act 1985^f6 applied.

This is subject to the following qualification.

(4)

Anything which is a finance lease for the purposes of generally accepted accounting practice does not fall to be accounted for as a loan for the purposes of this paragraph.

(5)

In this paragraph “generally accepted accounting practice” has the meaning given by section 836A of ICTA 1988^f7.

Annotations

Footnotes

f1: Section 730A was inserted by section 80(1) of the Finance Act 1995 and was relevantly amended by paragraph 5 of Schedule 38 to the Finance Act 2003.
f2: Section 263B was inserted by paragraph 5(1) of Schedule 10 to the Finance Act 1997 (c. 16).
f3: S.I. 1998/1870; amended by S.I. 1998/3174, 2000/809, 2079 and 3112, 2001/908, 3629 and 3778, 2002/453, 1409, 1974 and 3158 and 2003/2747.
f4: S.I. 1989/469; amended by S.I. 1990/678, 1991/733 and 2774, 1992/623, 1993/756, 1995/1539 and 3287, 1996/846 and 1355, 1997/511 and 1716, 1998/1869, 2000/3109, 2001/923, 3629 and 3777 and 2003/2748.
f5: Section 43A was inserted by section 110 of the Finance Act 2000 (c. 17) and was amended by section 103(4) of, and the relevant entry in Part 3(16) of Schedule 40 to, the Finance Act 2002 (c. 23).
f6: 1985 c. 6.
f7: Section 836A was inserted by section 103(2) of the Finance Act 2002.