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

Circumstances in which the Chapter applies

Section 259DA sets out the five conditions (A to E) that must all be met for the hybrid transfer deduction/non-inclusion mismatch rules in this Chapter to apply.

• There must be a hybrid transfer arrangement relating to an underlying instrument, and a payment or quasi-payment must be made under or in connection with that arrangement or instrument.
• Either the payer or a payee must be within the charge to UK corporation tax for the relevant period.
• It must be reasonable to suppose that, ignoring the hybrid mismatch rules (both UK and equivalent overseas rules), a hybrid transfer deduction/non-inclusion mismatch would arise.
• There must be a qualifying relationship between the parties: the payer is also a payee (for quasi-payments), the payer and payee are related, or the arrangement is a structured arrangement designed to exploit the mismatch.

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