Corporation Tax Act 2009 section 545

Ignoring effect on lender etc of sale of securities

Section 545 ensures that a lending company in a creditor repo or creditor quasi-repo arrangement is not taxed on income from the securities, nor given relief for manufactured payments, during the period the arrangement is in force — unless those amounts are recognised under generally accepted accounting practice.

• During a creditor repo or creditor quasi-repo, the lender is treated as not holding the securities and not making any representative payments for the period the arrangement is in force
• However, if any income amount is recognised in the lender's profit or loss under generally accepted accounting practice (or used in calculating amounts that are so recognised), it must still be brought into the corporation tax charge
• Similarly, any manufactured payment that is recognised under generally accepted accounting practice cannot be ignored for tax purposes
• The rule does not affect the separate question of whether such a payment (or part of it) may be deducted in calculating income for corporation tax or set against total profits