The following sets of regulations affecting securitisation companies came into force in December 2007. References to the ‘2006 regulations’ are to the Taxation of Securitisation Companies 2006 (SI2006/3296).
These regulations make a number of amendments to the 2006 regulations. They came into force on 27 December 2007, and have effect for periods beginning on 1 January 2007 and current on 3 December 2007. The regulations:
These Regulations extend the application of section 83 Finance Act 2005 so that it applies to accounting periods ending after 1 January 2008 and before 1 January 2017. They come into force on 27 December 2007. The extension applies to companies that are within section 83 at 1 January 2008, either as party to a capital market arrangement or a warehouse arrangement which began before that date.
Companies that continue to be within section 83 will continue to be taxed on the basis of old UK GAAP. However, a company can elect out of the extension of section 83, in which case it will be taxed on the basis of its statutory accounts.
A company that elects out of section 83, or one to which section 83 ceases to apply, for example, because it ceases to meet the conditions in section 83, must calculate transitional adjustments in accordance with the Change of Accounting Practice Regulations 2004, to be spread over the ten years beginning with the first period in which section 83 ceases to apply.
These Regulations apply to an insurance special purpose vehicle (ISPV) within the meaning of the Financial Services Authority’s Insurance Prudential Sourcebook. They came into force on 28 December 2007, and have effect for periods beginning on 1 January 2007, and current on 4 December 2007.
Where an ISPV either issues notes itself to third party investors as part of a capital market arrangement, or is lent the proceeds of a note issue by a note-issuing company or an intermediate borrowing company within the 2006 regulations, it will be taxed on the basis of its accounting profit or loss computed in accordance with UK GAAP as it stood at 31 December 2006, but without the application of FRS26.
As with the 2006 regulations, certain corporation tax rules on distributions, group relief, intra-group transfers, loan relationships and derivative contracts are disapplied in relation to ISPVs.
These Regulations amend the 2006 regulations so that a note-issuing company and an intermediate borrowing company in those regulations include a company that has a creditor relationship with an insurance securitisation company. They come into force on 28 December 2007.
