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

Circumstances in which the Chapter applies

Section 259KA sets out the seven conditions (A to G) that must all be met for the imported mismatches rules to apply, targeting situations where a UK corporation tax payer makes a payment connected to a wider series of arrangements that gives rise to a hybrid mismatch elsewhere in the chain.

• A payment or quasi-payment must be made under an arrangement that forms part of a series of linked arrangements, and the payer must be within the charge to UK corporation tax.
• Another arrangement in the series must give rise to one of the recognised types of hybrid mismatch (such as deduction/non-inclusion mismatches, double deduction amounts, or excessive permanent establishment deductions).
• The mismatch must not be capable of being counteracted under the laws of any territory that has implemented the OECD's hybrid mismatch recommendations; where only a proportion escapes counteraction, the rules apply only to that proportion.
• Either the payer and a relevant counterparty must be in the same control group, or the arrangement must be a structured arrangement designed to secure or share the benefit of the mismatch.