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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Other tax rules on corporate finance: securitisation: periods beginning on or after 1 January 2007: the regulations: the asset-holding company: partnerships

The asset-holding company: holdings through partnerships

Some securitisations are structured through partnerships. The asset-holding company holds an interest in a partnership and this partnership interest (the entitlement to a share of partnership profits and losses and of the partnership assets) forms the security for the capital market arrangement. The company will be capable of being a securitisation company only if

  • the assets and business of the partnership are confined to those which would be acceptable under the securitisation company regulations, and
  • the company has no assets or business apart from the holding of its partnership interest and (where applicable) any other activities that are permitted for a securitisation company.

A similar approach will be adopted in relation to companies which hold membership interests in limited liability partnerships (LLPs). (See BIM72100 for more on LLPs). The important difference between partnerships and LLPs for this purpose is that a company that is a member of an LLP can hold a membership interest which only carries an economic interest in certain assets of the LLP and certain parts of its business. For the purposes of the regulations the company member of the LLP will be treated as carrying on those activities (and holding only those assets) of the LLP to which its membership interest relates economically. Equally, the company member will not be disqualified from being a securitisation company solely because the LLP itself has other activities or assets which do not qualify under the regulations.