Taxation (International and Other Provisions) Act 2010 section 250

The receipt scheme conditions

Section 250 sets out the specific conditions (known as the "receipt scheme conditions") that must all be met for the receipt side of a hybrid mismatch arrangement to apply, focusing on the tax treatment of a payment received by a payee.

• Five conditions (A to E) must be satisfied, centring on the relationship between a qualifying payment, the payee's tax treatment, and the involvement of a scheme.
• The payee must receive an amount under the scheme that is not fully brought into account for either income tax or corporation tax purposes, or that is brought into account but under a different characterisation or for a different period than the corresponding payment.
• There must be a "deductible amount" — meaning an amount that can be deducted or otherwise relieved under the tax law of a territory outside the United Kingdom in connection with the qualifying payment made by the paying party.
• The mismatch in tax treatment between the deduction available to the payer abroad and the lesser (or nil) amount recognised in the payee's UK tax computation must arise because of the scheme, rather than for some unrelated reason.