Words and Phrases - "requirement"

A tax avoidance scheme under which the taxpayer was targeted to receive a double deduction for accrued interest on gilts transferred to him depended on the transfer not qualifying as a "stock lending transaction," which was defined as

so much of any arrangements between two persons ("the borrower" and "the lender") as are arrangements under which – (a) the lender transfers securities to the borrower otherwise than by way of a sale; and (b) a requirement is imposed on the borrower to transfer those securities back to the lender otherwise than by way of sale".

Vos LJ rejected a submission that the transaction did not come within this definition as the taxpayer had the right to transfer back securities in different quantities and with a different nominal value from those which he had borrowed. First, "the defined 'stock lending arrangement' refers only to so much of the arrangement as relates to the transfer of the loaned securities and retransfer of the loaned securities or securities of the same description" (para. 23). Second, "there was 'no realistic possibility that the gilt loan could be unwound other than by the redelivery of the exact securities borrowed'" (para. 27). He stated (at para. 24):

The word 'requirement' need not refer only to the black letter wording of the Stock Lending Agreement. It must be intended to refer to a requirement being imposed on the borrower...taking all the circumstances of the transactional arrangements into account.