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

Deemed dual inclusion income for the purposes of section 259IC

Section 259ICA expands the definition of dual inclusion income used in the hybrid entity counteraction rules, by treating certain non-deductible amounts as if they were ordinary income of an investor in a hybrid entity.

• An amount can be treated as dual inclusion income of an investor if it cannot be deducted anywhere as a taxable expense, and if it could have been deducted by the investor had the entity not been treated as a hybrid entity in the investor's jurisdiction.
• Where a person is resident in a territory with no tax or a nil tax rate, the test is whether the amount could have been deducted if the person were instead UK tax resident.
• The assumptions require you to imagine that the hybrid entity did not meet the conditions for hybrid status in the investor's jurisdiction, so that the investor would be treated as the direct recipient of the income for tax purposes.
• A taxable period is relevant if it begins within 12 months after the end of the accounting period in question, or a later period where it is just and reasonable to use that later period instead.

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