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

Circumstances in which the Chapter applies

Section 259GA sets out five conditions (A to E) that must all be satisfied before the hybrid payee deduction/non-inclusion mismatch rules in this Chapter can apply.

• The rules apply where a payment or quasi-payment is made under an arrangement, and a payee is a hybrid entity (a "hybrid payee"), creating a potential mismatch between deductions claimed and income included
• There must be a UK corporation tax connection — either the payer is within the charge to corporation tax, an investor in the hybrid payee is within the charge to corporation tax, or the hybrid payee is a limited liability partnership
• It must be reasonable to suppose that, ignoring the counteraction rules in this Chapter and Chapters 8 to 10 (and any equivalent overseas rules), a hybrid payee deduction/non-inclusion mismatch would arise
• There must be a relationship or structural link — the payer is itself a hybrid payee, the payer and a hybrid payee or investor are in the same control group during the relevant period, or the arrangement is a structured arrangement designed to exploit the mismatch