Corporation Tax Act 2009 section 547

Repo under arrangement designed to produce quasi-interest: tax avoidance

Section 547 is an anti-avoidance provision that targets repurchase arrangements (repos) which are structured to produce returns economically equivalent to interest while attempting to exploit tax advantages.

• This section addresses repos deliberately designed to generate quasi-interest returns as part of a tax avoidance arrangement
• It acts as an anti-avoidance backstop, ensuring that arrangements structured to mimic interest payments through repo transactions cannot be used to gain unintended tax benefits
• The provision originated from paragraph 12 of Schedule 13 to the Finance Act 2007 and was subsequently amended by the Finance Act 2009
• Where an arrangement falls within this provision, the tax treatment will be adjusted to counteract the avoidance, ensuring the quasi-interest element is taxed appropriately

---