Section 263E — Taxation of Chargeable Gains Act 1992: Structured finance arrangements

Structured finance arrangements 263E 1 This section applies if—

a section 809BZB or 809BZC of ITA 2007 or section 759 or 760 of CTA 2010 (disregard of intended effects of arrangement involving disposals of assets) applies in relation to a structured finance arrangement, b the borrower or a person connected with the borrower makes a disposal of any security at any time under the arrangement to or for the benefit of the lender or a person connected with the lender, and c condition A or B is met.

2 Condition A is that the person making the disposal (and no-one else) has the right or obligation under the arrangement to acquire the asset disposed of by that disposal at any subsequent time (whether or not the right or obligation is subject to any conditions).

3 Condition B is that—

a the asset disposed of by that disposal will subsequently cease to exist at any time, and b it is intended that that asset will be held by the lender, or a person connected with the lender, from the time of the disposal until that time.

4 The disposal of the security by the borrower or a person connected with the borrower is to be disregarded for the purposes of this Act. 4A If, at any time after that disposal, it becomes apparent that—

a the person making the disposal will not subsequently acquire under the arrangement the asset disposed of by that disposal, or b that asset will not be held as mentioned in subsection (3)(b), that person is to be treated for the purposes of this Act as disposing of that asset at that time for a consideration equal to its market value at that time.

5 Except in a case falling within subsection (4A), any subsequent acquisition by the person making the disposal of the asset disposed of by that disposal is to be disregarded for the purposes of this Act.

6 In this section— “ the borrower ”, in relation to a structured finance arrangement, means the person who is the borrower under the arrangement for the purposes of the defining section , “ the defining section ” in relation to a structured finance arrangement— means section 809BZA of ITA 2007 if it is section 809BZB or 809BZC of ITA 2007 that applies in relation to the arrangement, and means section 758 of CTA 2010 if it is section 759 or 760 of CTA 2010 that applies in relation to the arrangement, “ the lender ”, in relation to a structured finance arrangement, means the person who is the lender under the arrangement for the purposes of the defining section , “ security ” means any such asset as is mentioned in subsection (2)(b) and (c) of the defining section .

7 For the purposes of this section—

a references to a person connected with the borrower do not include the lender, and b references to a person connected with the lender do not include the borrower.