Regulation 2 Amendments to the Taxation of Securitisation Companies Regulations 2006

(1)

The Taxation of Securitisation Companies Regulations 2006 are amended as follows.

(2)

In regulation 2 (interpretation) in paragraph (1) in the definition of “financial asset”—

(a)

in subparagraph (a) at the beginning insert “subject to paragraph (b)(ii)”; and

(b)

for paragraph (b) substitute—

“(b)
does not include—

(i)
shares (other than shares in a securitisation company which is party to the capital market arrangement);

(ii)
derivative contracts as defined for the purposes of Schedule 26 to the Finance Act 2002^f1 where the underlying subject matter is or includes shares (other than shares in a securitisation company which is party to the capital market arrangement) or land;

(iii)
loan relationships with embedded derivatives within section 94A(1) of the Finance Act 1996 (loan relationships with embedded derivatives)^f2 where the underlying subject matter of the embedded derivative is or includes shares or land;

(iv)
relevant assets within paragraph 7(1) of Schedule 6 to the Finance (No. 2) Act 2005 (loan relationships with embedded derivatives)^f3 where the underlying subject matter of any embedded derivative is or includes shares or land.”.

(3)

In regulation 3 (scope of these Regulations) in paragraph (2)(c) for “regulation 13” substitute “regulations 13 and 13A”.

(4)

In regulation 6 (meaning of “asset-holding company”) in paragraph (3) after “company’s” insert “initial”.

(5)

In regulation 7 (meaning of “intermediate borrowing company”)—

(a)

in paragraph (2) after sub-paragraph (a) insert—

“(aa)
a partnership that would be an asset-holding company if it were a company,”,

(b)

in paragraph (3) after “company’s” insert “initial”.

(6)

In regulation 8 (meaning of “warehouse company”)—

(a)

renumber regulation 8 as 8(1);

(b)

at the end insert—

“(2)
For the purposes of these Regulations the business of a warehouse company described in paragraph (1) shall be referred to as a “warehouse arrangement”.”.

(7)

In regulation 10 (meaning of “retained profit”) in paragraph (1)—

(a)

for “or a” substitute “, a”;

(b)

after “transaction” insert “or a warehouse arrangement”.

(8)

In regulation 12 (securitisation companies that have an unallowable purpose) in paragraph (4) in the definition of “tax advantage” for “section 709(1)” substitute “section 840ZA”^f4.

(9)

After regulation 13 insert—

“Securitisation companies to which section 83 of the Finance Act 2005 does not apply

13A.

These Regulations do not apply to a company in a case where—

(a)
section 83(1) of the Finance Act 2005 does not apply by virtue of an election under regulation 2 of the Securitisation Companies (Application of Section 83(1) of the Finance Act 2005: Accounting Standards) Regulations 2007, and

(b)
the company continues to be party to the arrangement or transaction referred to in paragraph (1)(b) of regulation 2 of those Regulations.”.

(10)

In regulation 19 (non-application of provisions of Schedule 9 to the Finance Act 1996) insert the following paragraphs at the end—

“(3)
Paragraph 17 of that Schedule (deeply discounted securities where companies have a connection)^f5 shall not apply if the person standing in the position of a creditor as respects a security within that paragraph is a securitisation company.

(4)
Paragraph 18 of that Schedule (deeply discounted securities of close companies)^f6 shall not apply if the person standing in the position of a creditor as respects a security within that paragraph is a securitisation company.”.

Annotations

Footnotes

f1: 2002 c. 23. Derivative contracts are defined in paragraph 2 of Schedule 26 and paragraph 2 has been amended by article 3 of S.I. 2004/2201 and article 3 of S.I. 2006/3269.
f2: 1996 c. 8; section 94A was inserted by paragraph 13 of Schedule 10 to the Finance Act 2004 (c. 9) and amended by paragraph 28(1) and (2) of Schedule 4 to the Finance Act 2005.
f3: 2005 c. 22.
f4: Section 840ZA of the Income and Corporation Taxes Act 1988 (c. 1) was inserted paragraph 225 of Schedule 1 to the Income Tax Act 2007 (c. 3).
f5: Paragraph 17 of Schedule 9 to the Finance Act 1996 (c. 8) was amended by paragraphs 1 and 33 of Schedule 25 and Part 3(12) of Schedule 40 to the Finance Act 2002 (c. 23), paragraphs 4(2) and (3) of Schedule 34 and paragraphs 1 and 4 of Schedule 37 to the Finance Act 2003 (c. 14) and paragraphs 485 and 489(1) to (5) of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005 (c. 5).
f6: Paragraph 18 of Schedule 9 to the Finance Act 1996 was amended by paragraphs 1 and 34 of Schedule 25 and Part 3(12) of Schedule 40 to the Finance Act 2002 (c. 23), paragraphs 1 and 5 of Schedule 37 to the Finance Act 2003 (c. 14), paragraph 6 of Schedule 6 and Part 2(4) of Schedule 42 to the Finance Act 2004 (c. 12), and paragraphs 485 and 489(1), (6) to (8) of Schedule 1 to the Income Tax (Trading and Other Income) Act 2005 (c. 5) and paragraph 3 of Schedule 8 and Part 2(9) of Schedule 11 to the Finance (No. 2) Act 2005 (c. 22).