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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: securitisation: background: master trust securitisation: example

Basic master trust structure

Diagram of a basic master trust structure

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A Master Trustee (or Receivables Trustee) company is formed to receive assignments of receivables (periodically or on a continuous basis) from the originator, and to hold the rights to those receivables on behalf of the beneficiaries described below.

One or more SPVs are formed to act as Investor Beneficiary SPVs under the Master or Receivables Trust. The Investor Beneficiary SPV makes payments to the Master or Receivables Trustee for the grant of its beneficial interests.

The Originator also becomes a beneficiary under the Master or Receivables Trust (the Originator Beneficiary), and receives distributions of principal and income from the Trust.

One or more Issuer SPVs are established. The Issuer SPV will not acquire beneficial interests under the Master or Receivables Trust. It will issue bonds into the capital markets to third party investors, and use the funds raised to make loans to the Investor Beneficiary SPV.

Profit Extraction (see CFM72090) may be achieved through the Master or Receivables Trust itself by giving the Originator Beneficiary the right to surplus cashflows from the securitised assets.