Sale and repurchase transactions
The measure
A proposed retrospective amendment to the corporation tax treatment of manufactured payments received in the course of sale and repurchase (or 'repo') transactions was made on 9 February 2010. The proposed legislation confirms that amounts to be brought into account for tax purposes by companies in respect of manufactured payments are those that are taken into account in accordance with generally accepted accounting practice.
Who will be affected?
Companies who receive manufactured payments under repo transactions, predominantly banking groups.
When?
As originally announced, the government proposes that this legislation will have retrospective effect from the date the repo rules were introduced ie 1 October 2007.
Whilst any retrospective legislation is of concern, it is understandable that the government has felt the need to introduce this move to prevent a potential windfall from the lack of clarity in the original legislation.
