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

Circumstances in which the Chapter applies

Section 259IA sets out the three conditions (A, B and C) that must all be met for the hybrid entity double deduction mismatch rules in Chapter 9 to apply.

• Condition A: an amount could be deducted both from the income of a hybrid entity and from the income of an investor in that entity in a different jurisdiction, creating a "hybrid entity double deduction amount"
• Condition B: either the hybrid entity or the investor must be within the charge to UK corporation tax during the relevant deduction period
• Condition C: the hybrid entity and the investor must be related during either deduction period, or the arrangement must be a "structured arrangement"
• An arrangement can be "structured" even if it also has a genuine commercial purpose, provided it is designed to secure the double deduction or its terms share the economic benefit of the double deduction between the parties