Section 886 | Interest paid by recognised clearing houses etc

(1)The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest made by a relevant entity if—

(a)the relevant entity is carrying on business as the provider of a central counterparty clearing service or as a central securities depository, and

(b)the interest is paid in the ordinary course of that business, on margin or other collateral deposited with it by users of the service or as a central securities depository.

(2)The duty to deduct a sum representing income tax under section 874 does not apply to interest treated by virtue of section 607 (treatment of price differences under repos), or paragraph 5 of Schedule 13 to FA 2007 (relief for borrower for finance charges in case of debtor repos and debtor quasi-repos), as paid by a relevant entity in respect of contracts made by it as the provider of a central counterparty clearing service or as a central securities depository .

(3)In this section—

“central counterparty clearing service” means the service provided by a relevant entity to the parties to a transaction where there are contracts between each of the parties and the relevant entity (in place of, or as an alternative to, a contract directly between the parties), and

“relevant entity”, means any of the following (as defined for the purposes of FISMA 2000 by section 285 of that Act)—

a recognised clearing house;

a recognised investment exchange;

a third country central counterparty.

a recognised CSD;

a third country CSD.