CFM17528 - Repos: FA 2007 rules for companies: debtor repo and debtor quasi-repo examples

This guidance describes the corporation tax treatment of sale and repurchase arrangements (“repos”) where the initial sale of securities takes place on or after 1 October 2007

Debtor repos and debtor quasi-repos: examples

CFM17528a gives an example of a debtor repo where no income arises during the term of the repo.

CFM17528b gives an example of a debtor repo where income arises during the term of the repo and a manufactured payment is received (a “gross-paying” transaction).

CFM17528c gives an example of a debtor repo where income arises during the term of the repo and no manufactured payment is received (a “net-paying” transaction).

CFM17528d gives examples of debtor quasi-repos.

In each example, the repo finance charge rate is 6% per annum. As none of the examples lasts for more than 12 months, neither the question of deduction of tax nor of any potential interest long stop ( CFM17524, last paragraph) arises.