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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Deemed loan relationships: repos: tax rules: creditor quasi-repos

Definition of ‘creditor quasi-repo’ (CTA09/S544)

A company (‘the lender’) has a creditor quasi-repo if it does not have a creditor repo, and if all of the following conditions are met:

  • Condition A: under an arrangement another person receives from the lender any money or other asset (‘the advance’).
  • Condition B: in accordance with GAAP the accounts of the lender record for the period in which the advance is received a financial liability in respect of the advance.
  • Condition C: under the arrangement or another arrangement, a person sells securities to the lender or any other person at any time.
  • Condition D: that arrangement or other arrangement

    • entitles or obliges the lender subsequently to sell the securities, or
    • entitles or obliges a person other than the lender subsequently to sell the securities, and makes ‘other relevant provision’.

‘Other relevant provision’ means provision

* for the receipt from the lender of money, securities or some other asset for the purpose of enabling the other person to make the subsequent sale; or
* for the discharge of any liability to the lender (whether by offset or otherwise) for the purpose of enabling the other person to make the subsequent sale.
  • Condition E: in accordance with GAAP, the subsequent sale of the securities or the receipt from the lender of the asset (or discharge of the liability to the lender) would extinguish the financial asset in respect of the advance that has been recorded in the accounts of the lender.

A company also has a creditor quasi-repo if it is a member of a partnership that meets these conditions.

There are examples of creditor quasi-repos at CFM46250.