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This Practice Note outlines what is normally covered in a UK tax opinion given by the tax lawyers acting for a UK tax resident securitisation company involved in an asset-backed securitisation (also known as an ABS or true sale securitisation).

An ABS is, in its basic form, a transaction whereby a company (Originator) monetises (sells) its assets to an orphan Special purpose vehicle (SPV) in order to raise cash. The SPV funds the acquisition of the assets by issuing listed notes to the market. The assets underlying the securitisation are known as securitised assets.

A special corporation tax regime applies to companies that:

1. •

   qualify as securitisation companies, and

2. •

   satisfy two additional conditions:

   1. â—¦

      the unallowable purposes test, and

   2. â—¦

      the payments condition

This tax regime is set out in the Taxation of Securitisation Companies Regulations 2006 (Securitisation Regs), SI 2006/3296 and is often referred to as the permanent securitisation regime. For more information on this tax regime, see Practice Note: Asset-backed securitisations—the UK tax treatment.

In practice, ABS structures are sometimes more