753B Application.

(1) This Chapter shall apply to a financial transaction, entered into on or after 1 January 2020, other than—

(a) a financial transaction—

(i) pursuant to which a stock buyer holds qualifying securities or equivalent stock, and

(ii) as a consequence of which a distribution arises or accrues to that stock buyer from those qualifying securities or that equivalent stock,

except where—

(I) the stock seller would be entitled—

(A) to a repayment of any tax withheld from the ^[2]>interest^<[2][2]>distribution^<[2], or

(B) to receive the distribution without the deduction of tax,

under any provision of the Tax Acts or under arrangements made with another territory having the force of law by virtue of section 826(1), had that stock seller not entered into the financial transaction and received that distribution directly, and

(II) the distribution is in the form of cash,

(b) a financial transaction—

(i) pursuant to which a stock buyer holds qualifying securities, and

(ii) as a consequence of which interest arises or accrues to that stock buyer from those securities,

except where—

(I) the stock seller would be entitled—

(A) to a repayment of any tax withheld from the ^[3]>distribution^<[3][3]>interest^<[3], or

(B) to receive the interest without deduction of tax,

under any provision of the Tax Acts or under arrangements made with another territory having the force of law by virtue of section 826(1), had that stock seller not entered into the financial transaction and received that interest directly, or

(II) neither the stock seller nor the stock buyer would be entitled to receive a payment of interest without deduction of tax under section 246 and, where such tax is deducted, neither the stock seller nor the stock buyer would be entitled to a repayment of any such tax withheld or any part thereof.

(2) Where this Chapter applies, in applying the Tax Acts and the Capital Gains Tax Acts to a financial transaction, regard shall be had to the substance of the financial transaction, rather than to its legal form, such that—

(a) the disposal and subsequent reacquisition of qualifying securities, or equivalent stock thereof, pursuant to the financial transaction shall not be treated as a disposal or an acquisition for the purposes of the Capital Gains Tax Acts,

(b) any income, profits or gains, including fees, margins, profits or other financial gain arising or accruing to a stock seller or a stock buyer, either directly or indirectly, pursuant to—

(i) the financial transaction, and

(ii) in a case in which the financial transaction comprises a stock transfer, the corresponding repurchase agreement,

shall be treated as if that income, those profits or those gains, as the case may be, arose from the lending of money, or money’s worth, at interest, and

(c) any manufactured payment shall be—

(i) deductible in accordance with section 753C(2) and (3), and

(ii) charged to tax in accordance with section 753C(5) and (6).