Corporation Tax Act 2010 section 155B

Certain mortgage arrangements not within sections 154 and 155

Section 155B provides an exemption from the group relief anti-avoidance rules in sections 154 and 155 where shares or securities in a company are used as security under a mortgage arrangement.

• Where shares or securities in a company are pledged as security under a mortgage, the arrangement is not treated as one that could restrict group relief under sections 154 or 155, provided the mortgagee has not yet exercised its enforcement rights.
• The exemption only applies while the mortgagee holds no greater rights over the mortgaged shares or securities than are necessary to protect its position as lender.
• The exemption is lost if the mortgagee, acting alone or together with connected persons, is able to dictate the terms or timing of a default or other trigger event that would allow it to enforce its rights against the mortgagor.
• The mere existence of the mortgage does not, by itself, make the mortgagee a connected person in relation to the company whose shares or securities are subject to the mortgage.