CFM72260 – Corporate Finance Manual – HMRC Internal Manual

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Securitization Companies (Application of Article 83(1) of the Finance Act 2005: Accounting Standards) Regulations 2007

Extension of the transitional regime before December 31, 2016

In its initial version, FA05/S83 applied to accounting periods ending before January 1, 2007. In FA 2006, this deadline was extended to periods ending before January 1, 2008. FA07/S59 introduced the sub- sections 7A and 7B in FA05/S83 which authorized the making of regulations to maintain the effect of section 83 beyond 2008. The regulations made under this power were made in November 2007 and are the regulations of 2007 on securitization companies (application of article 83(1) of the 2005 finance law: accounting standards) (SI 2007/3338).

The Regulations provide that where FA05/S83 applied to a company for periods ending before January 1, 2008, and the company continues to be a party to the capital market arrangement which brought it under section 83, then section 83 will continue to apply to it for periods ending on or after January 1, 2008 but before January 1, 2017.

However, a company can choose not to benefit from this treatment, before the end of its first period ending on January 1, 2008 or later. If the company chooses not to benefit from this treatment, it will be taxed on the basis of its statutory accounts in the usual way. This is subject to transitional rules. See CFM72270.

For periods ending after January 1, 2008, a company to which FA05/S83 applied before that date must therefore either:

  • remain in FA05/S83 and therefore be taxed according to calculations established on the basis of old UK GAAP;
  • opt for the permanent regime for the securitization of financial assets (if he exercises his choice within 18 months from the end of his first financial year beginning on or after January 1, 2007 – CFM72330);
  • elect out of the extension of FA05/S83.

When a company, to which the maintenance of FA05/S83 applies, becomes party to a new CMA, it will either be subject to one of the permanent regimes (CFM72310) under this CMA, or it will be taxed according to its statutory scheme. accounts. The “Old UK GAAP”, ie the UK GAAP as they existed on December 31, 2004, will not apply to such a company. Being “party to a CMA” before January 1, 2008 should be considered to include companies in warehouse arrangements and companies financed by commercial paper within FA05/S83.

A company to which FA05/S83 applies before January 1, 2008 can either opt for the permanent regime if it meets the conditions, or choose not to benefit from the extension of FA05/S83. It cannot do both (Regulation 13A of the Taxation of Securitization Companies Regulations 2006 (CFM72330)).

Extension of the interim regime: renewal after 2016

The Securitization Companies (Application of Section 83(1) of the Finance Act 2005: Accounting Standards) (Amendment) Regulations 2016 (SI 2016/1182) extended the application of FA05/S83. This extension applies to a company still taxed under these rules and which continues to be part of the capital market regime (which brought it under Article 83) from 1 January 2017.

The interim regime has been extended for a further 20 years, so as to apply to accounting periods ending before 1 January 2037, subject to a company choosing not to apply the extension.

An election out of the FA05/S83 extension is irrevocable and must be made in writing to HMRC by the later of the following dates:

  • the end of the first accounting period ending on or after January 1, 2017, and
  • March 31, 2017.
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