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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Other tax rules on corporate finance: securitisation: periods beginning on or after 1 January 2007: modifications to commencement and cessation rules

Commencement and cessation as a securitisation company

A new company set up on or after 1 January 2007 as a securitisation company will be within the regulations from the outset. The normal rules in CTA09/Part 2/Ch 2 on when an accounting period begins for corporation tax purposes will apply.

A ‘shelf company’ whether formed before or after 1 January 2007, but which becomes party to a capital market arrangement after that date will begin a new accounting period for tax purposes in accordance with Regulation 15(2), which inserts a new paragraph (f) into the rules in ICTA88/S12(3) (now CTA09/S10(1). This requires a new accounting period for corporation tax purposes to begin or cease when the company becomes subject to being taxed as a securitisation company. The same will be true in the (less likely) case of a company with an existing activity (and corporation tax accounting periods) which was not a securitisation company before 1 January 2007 and which becomes one after that date.

Regulation 15 also has the effect that where a securitisation company ceases to qualify for the regime, its accounting period will come to an end and a new one will begin. For its new accounting periods it will be taxed according to its accounts.

However, in a case (which is likely to be exceptional in practice) where a company ceases to be a securitisation company as defined in the regulations, but does still fall within the definition of a securitisation company under FA05/S83, it will be taxed for its new accounting periods on the basis of old UK GAAP. This might occur if (for example) an asset-holding company which had previously held only ‘financial assets’ (CFM72350) were to acquire non-financial assets which became part of the security for the capital market arrangement.