Taxation (International and Other Provisions) Act 2010 section 259CC

Interpretation of section 259CB

Section 259CC provides the key definitions used in section 259CB, which deals with hybrid and otherwise impermissible deduction/non-inclusion mismatches involving financial instruments.

• A payee's taxable period is "permitted" if it begins within 12 months after the end of the payment period, or later where it is just and reasonable for the income to arise in that later period.
• Income received by a payee is "under-taxed" if the highest tax rate actually applied to it (after allowing for credits for underlying tax) is less than the payee's full marginal rate — i.e. the highest rate that could apply to taxable profits including ordinary income from financial instruments.
• Specific UK corporation tax provisions dealing with the release of debts (including insolvency situations, connected company debt releases, equity-for-debt swaps, and corporate rescue scenarios) are designated as "relevant debt relief provisions", and separate rules in sections 259NEB to 259NEF determine whether excess arises in "relevant debt relief circumstances".
• Capital gains or equivalent foreign taxes on capital amounts (known as "qualifying capital amounts") are brought into the analysis by treating them as ordinary income, but any excess of the capital tax rate over the income tax rate is ignored, and amounts are not regarded as taxed to the extent they benefit from specific exemptions, reliefs, or refunds.