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

Counteraction where the payer is within the charge to corporation tax for the payment period

Section 259GC sets out how a hybrid payee deduction/non-inclusion mismatch is counteracted when the entity making the payment is subject to UK corporation tax for the relevant period.

• This section applies where the payer is within the charge to UK corporation tax for the payment period in question.
• The counteraction operates by reducing the tax deduction that the payer can claim against its income.
• The reduction equals the full amount of the hybrid payee deduction/non-inclusion mismatch identified under the rules in section 259GA(5).
• The effect is that the payer cannot obtain a UK corporation tax deduction to the extent that the corresponding income is not taxed in the hands of the payee due to its hybrid nature.