Taxes Consolidation Act 1997 section 753A

Interpretation (Chapter 3)

Section 753A sets out the definitions used in the rules governing stock borrowing and repurchase (repo) arrangements.

• Stock borrowing and repo transactions involve a temporary transfer of legal title to qualifying securities, with an agreement to reverse the transaction within 12 months, and are treated in substance as short-term loans.
• Qualifying securities are interest-bearing, discounted or premium-bearing securities, or stocks and shares quoted on a recognised stock exchange; qualifying institutions include companies within the charge to corporation tax, investment undertakings, pension schemes, charities, certain foreign pension schemes and building societies.
• A financial transaction is a stock borrowing or repo between a qualifying institution and a non-individual counterparty where it is reasonable to consider that the arrangement is, in substance, equivalent to an interest-bearing loan.
• A manufactured payment is compensation paid by the stock buyer to the stock seller for any dividends or interest that accrue to the stock buyer during the period the qualifying securities are held under the financial transaction.