Whole business securitisations—the UK tax opinion
Whole business securitisations—the UK tax opinion

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Whole business securitisations—the UK tax opinion
  • The issuer’s tax position
  • Tax position of intermediate borrowing companies
  • Tax treatment of loans made to the operating companies
  • Secondary liabilities and degrouping charges
  • Withholding tax
  • Indirect taxes

This Practice Note outlines what is normally covered in a UK tax opinion given by the tax lawyers acting for the UK tax resident securitisation companies involved in a whole business securitisation (also known as an operating asset securitisation).

A special corporation tax regime applies to companies that:

  1. qualify as securitisation companies, and

  2. satisfy two additional conditions:

    1. the unallowable purposes test, and

    2. the payments condition

This tax regime is set out in the Taxation of Securitisation Companies Regulations 2006 (Securitisation Regs) and is often referred to as the permanent securitisation regime. This regime is explained in Practice Note: Asset-backed securitisations—the UK tax treatment by reference to an asset-backed securitisation structure, but can also apply to a whole business securitisation structure, provided all the relevant conditions are satisfied.

In a whole business securitisation, the companies involved in the securitisation often form part of a wider corporate group which includes members that are not involved in the securitisation. This gives rise to tax concerns (which are summarised in Practice Note: Whole business securitisations—UK tax considerations) that need to be covered in the tax opinion. Furthermore, in a whole business securitisation structure, funds are normally raised partly from the securitisation and partly from bank loans. If the bank loans are given to the issuer, it is unlikely to qualify as a note-issuing company since its only funding