Section 662 | New securities issued with extra return: special rules about payments

From legislation.gov.uk

(1)In the case of a transfer treated as made under section 649 (new securities issued with extra return), the amount of the payment treated as made under section 632(1) (payment on transfer with accrued interest) is not determined under section 632(2) to (5).

(2)Instead, that amount depends on whether under the issue arrangements the person to whom the new securities are issued accounts to the issuer separately—

(a)for the extra return, and

(b)for the rest of the issue price.

(3)If the person does account for them separately, the amount of the payment is the amount of the extra return separately accounted for.

(4)If the person does not account for them separately, the amount of the payment is an amount equal to—

Formula

I \times \frac{A}{B}

where—

I is the interest payable on the new securities on the first interest payment day after the new issue day (“the payment day”),

A is the number of days in the relevant period, and

B is the number of days in the period beginning with the first day of the relevant period and ending with the payment day.

(5)Subsection (4) is subject to section 659 (transfers with or without accrued interest: interest in default).

(6)In this section “the extra return”, “the new issue day”, “new securities” and “the relevant period” have the same meaning as in section 649.