Taxation (International and Other Provisions) Act 2010 Schedule 7 Part 19

Relocation of repo provisions into the manufactured payments chapter

Schedule 7 Part 19 moves existing rules about the tax treatment of sale and repurchase ("repo") transactions from the Finance Act 2007 into the Income Tax Act 2007, placing them alongside the manufactured payments rules where they logically belong.

• A company acting as lender in a creditor repo is deemed to make manufactured payments representing income on the securities sold, bringing it within the income tax deduction at source rules.
• A company acting as borrower in a debtor repo is deemed to receive manufactured payments, and the reverse charge provisions for manufactured payments apply accordingly.
• Where a repo involves an actual manufactured payment, that real payment is ignored and the deemed payment rules under the repo provisions take priority instead.
• The Treasury has a regulation-making power to modify these repo rules for non-standard cases, such as where securities are not subsequently repurchased or where redemption arrangements apply.