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HMRC internal manual

Corporate Finance Manual

Other tax rules on corporate finance: securitisation: periods beginning on or after 1 January 2007: credit card securitisations

Credit card securitisations: specific circumstances

Two specific points sometimes arise in the context of credit card securitisations.

Treatment of interest paid by card-holders

Where the amounts receivable under credit card agreements are securitised, HMRC do not take the view that interest paid by the card-holders is required to be treated as ‘annual interest’ unless there is a positive intention that the balance is to remain outstanding for more than one year. Consequently, withholding tax would not be required to be deducted from such interest payments.

Treatment of other fee income

A credit card securitisation may also involve other receivables such as fees under the terms and conditions of the credit card and commissions paid by a retailer. HMRC do not consider that where the Master Trustee (or Receivables Trustee), or the Originator Beneficiary (see CFM72050), is not regarded as carrying on a trade in the UK, either company would suffer a residual charge in connection with such receivables under Part 5, Chapter 8 of ITTOIA 2005