Section 656 — Income Tax Act 2007: Power to modify: non-standard sale and repurchase arrangements

Power to modify: non-standard sale and repurchase arrangements 656 1 The Treasury may by regulations provide for section 655 to apply with modifications in relation to cases involving non-standard sale and repurchase arrangements.

2 A case involves a non-standard sale and repurchase arrangement if—

a there is a sale and repurchase arrangement in respect of securities, b T makes a sale of the securities under the agreement to sell them (“the original sale”),

c the securities are UK shares, UK securities or overseas securities, and d any of conditions A to E is met in relation to the sale and repurchase arrangement.

3 Condition A is that—

a the obligation to buy back the securities is not performed, or b the option to buy them back is not exercised.

4 Condition B is that provision is made by or under an agreement for different or additional UK shares, UK securities or overseas securities to be treated as (or as included with) representative securities.

5 Condition C is that provision is made by or under an agreement for any UK shares, UK securities or overseas securities to be treated as not included with representative securities.

6 Condition D is that provision is made by or under an agreement for the sale price or repurchase price to be decided or varied wholly or partly by reference to post-agreement fluctuations.

7 Condition E is that provision is made by or under an agreement for a person to be required, in a case where there are post-agreement fluctuations, to make a payment in the period—

a beginning immediately after the making of the agreement for the original sale, and b ending when the repurchase price becomes due. 8 “Post-agreement fluctuations” are fluctuations in the value of —

a securities transferred in pursuance of the original sale, or b representative securities, which occur in the period after the making of the agreement for the original sale. 9 “Representative securities” are UK shares, UK securities or overseas securities which, for the purposes of the repurchase, are to represent securities transferred in pursuance of the original sale.