CFM17275 - Repos: taxation: consequences of paragraph 15

This guidance describes the treatment of repos for income tax and capital gains tax purposes, and for corporation tax purposes where the original owner transfers the securities to the interim holder before 1 October 2007

Consequences of not treating transfers or sales as related transactions

By not treating any of the sales or transfers in a repo or stock lending as related transactions, FA96/SCH9/PARA15(4A) treats the seller (or lender) as retaining the loan relationship. The seller (or lender) must therefore continue to bring debits and credits, such as accruing discounts, into account.

However, Paragraph 15 (4A) makes it clear that the interim holder brings into account any interest on the security received during its period of ownership.