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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: securitisation: periods beginning on or after 1 January 2005: the interim regime

Overview of the interim regime

The main reason for introducing a different tax regime for securitisation companies was to prevent such companies being adversely affected by the introduction of International Accounting Standards from 1 January 2005. FA05/S83 provided for certain types of securitisation companies to be taxed according to UK GAAP as it stood on 31 December 2004 for a further two years, that is, for periods ending before 1 January 2007. This was to allow time for the development of a permanent regime. FA06/S101 extended this to periods ending before 1 January 2008.

FA07/S59 inserted FA05/S83(7A) and (7B), which allow the interim regime to be further extended, by regulations, for periods ending after 1 January 2008. Regulations made under FA05/S83(7A) extend FA05/S83 to periods ending on or before 1 January 2017.

Securitisation companies as defined in FA05/S83 are required to use UK GAAP in determining taxable profits for periods of account beginning on or after 1 January 2005, unless they either

  • elect into the permanent regime which applies to securitisation companies involved in securitisations of ‘financial assets’ for periods beginning on or after 1 January 2007 (CFM72330); or
  • elect out of the extension of FA05/S83 (CFM72260).

The definitions of the types of company that fall within FA05/S83 are similar but not identical to those in the permanent regulations. The interim regime applies to a wider range of companies than the permanent regime, because the latter applies only to companies that hold ‘financial assets’ (CFM72350).