F1PART 6AHybrid and other mismatches
CHAPTER 7Hybrid payee deduction/non-inclusion mismatches
Application of Chapter
259GACircumstances in which the Chapter applies
1
This Chapter applies if conditions A to E are met.
2
Condition A is that a payment or quasi-payment is made under, or in connection with, an arrangement.
3
Condition B is that a payee is a hybrid entity (a “hybrid payee”).
4
Condition C is that—
a
the payer is within the charge to corporation tax for the payment period,
b
an investor in a hybrid payee is within the charge to corporation tax for an accounting period some or all of which falls within the payment period, or
c
a hybrid payee is a limited liability partnership.
5
Condition D is that it is reasonable to suppose that, disregarding the provisions mentioned in subsection (6), there would be a hybrid payee deduction/non-inclusion mismatch in relation to the payment or quasi-payment (see section 259GB).
6
The provisions are—
a
this Chapter and Chapters 8 to 10, and
b
any equivalent provision under the law of a territory outside the United Kingdom.
7
Condition E is that—
a
it is a quasi-payment that is made as mentioned in subsection (2) and the payer is also a hybrid payee (see section 259BB(7)),
b
the payer and a hybrid payee or an investor in a hybrid payee are in the same control group (see section 259NB) at any time in the period—
i
beginning with the day on which the arrangement mentioned in subsection (2) is made, and
ii
ending with the last day of the payment period, or
c
that arrangement is a structured arrangement.
8
The arrangement is “structured” if it is reasonable to suppose that—
a
the arrangement is designed to secure a hybrid payee deduction/non-inclusion mismatch, or
b
the terms of the arrangement share the economic benefit of the mismatch between the parties to the arrangement or otherwise reflect the fact that the mismatch is expected to arise.
9
The arrangement may be designed to secure a hybrid payee deduction/non-inclusion mismatch despite also being designed to secure any commercial or other objective.
10
The following provisions contain provision for the counteraction of the hybrid payee deduction/non-inclusion mismatch—
a
section 259GC (cases where the payer is within the charge to corporation tax for the payment period),
b
section 259GD (cases where an investor in a hybrid payee is within the charge to corporation tax), and
c
section 259GE (cases where a hybrid payee is a limited liability partnership).
Pt. 6A inserted (with effect in accordance with Sch. 10 paras. 18-21 of the amending Act) by Finance Act 2016 (c. 24), Sch. 10 para. 1