Section 886 — Income Tax Act 2007: Interest paid by recognised clearing houses etc

Interest paid by recognised clearing houses etc 886 1 The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest made by a relevant entity if—

a the relevant entity is carrying on business as the provider of a central counterparty clearing service or as a central securities depository , and b the interest is paid in the ordinary course of that business, on margin or other collateral deposited with it by users of the service or as a central securities depository .

2 The duty to deduct a sum representing income tax under section 874 does not apply to interest treated by virtue of section 607 (treatment of price differences under repos) , or paragraph 5 of Schedule 13 to FA 2007 (relief for borrower for finance charges in case of debtor repos and debtor quasi-repos), as paid by a relevant entity in respect of contracts made by it as the provider of a central counterparty clearing service or as a central securities depository .

3 In this section— “ central counterparty clearing service ” means the service provided by a relevant entity to the parties to a transaction where there are contracts between each of the parties and the relevant entity (in place of, or as an alternative to, a contract directly between the parties), and “relevant entity”, means any of the following (as defined for the purposes of FISMA 2000 by section 285 of that Act)—

a recognised clearing house; a recognised investment exchange; ... a third country central counterparty. a recognised CSD; ... a third country CSD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .