Following the case of Bank of Ireland Britain Holdings Ltd v R & C Commrs (see our Tax Cases reports section this month), legislation has been introduced to modify the Repo rules.

In a Report Stage amendment to this year's Finance Bill, new rules to govern third party Repo transactions have been introduced, which are to take effect from 27 June. In very brief summary, the intent of the legislation per the official statement is to prevent the holder of securities acquired under a repo agreement from obtaining a tax deduction for a deemed payment representing interest or dividends unless that person is also the person to whom the securities were first transferred, while also ensuring that the transfer of securities under a repo can be ignored for tax purposes only if the seller and buyer and reseller and repurchaser are the same two people.