BN 09: Securitisation and International
Accounting
Standards (IAS)
Who is likely to be affected?
1. Large companies involved in securitisations or issuance of debt.
General description of the measure
2. Changes to the temporary regime for securitisation companies under which they remain on old UK generally accepted accounting practice (GAAP) for tax purposes.
Operative date
3. The regime is extended by one year. The changes to the regime have effect from the original start date of 1 January 2005.
Current law and proposed revisions
4. A temporary tax regime for securitisation companies was introduced in Section 83 Finance Act 2005, to enable such companies to be taxed on the basis of accounting standards in force before the introduction of IAS. This regime was due to end on 31 December 2006.
5. In order to allow time to develop a more permanent tax regime for securitisation companies, the temporary regime is being extended by one year to 31 December 2007.
6. Amendments are also being made to the definitions of securitisation companies for the purpose of the temporary regime to ensure it works as intended.
7. The first change is to exclude companies that issue debt in circumstances other than a securitisation.
8. Companies that were within the regime on 22 March 2006, or were legally committed to entering into arrangements on 22 March 2006 that would have brought them within the regime, can elect to retain the original rule.
9. The other changes allow the inclusion of chains of intermediate borrowing companies, and extend the range of permitted activities that a note issuing company can carry on to include the activity of acting as a guarantor.
10. If you have any questions about this change, please contact Sarah Weston on 020 7147 2575 or email Sarah Weston Information about Budget measures is now available.
