Taxation (International and Other Provisions) Act 2010 section 295HA

Circumstances in which the Chapter applies

Section 295HA sets out the five conditions (A to E) that must all be met for the multinational payee deduction/non-inclusion mismatch rules in Chapter 8 to apply.

• The rules apply where a payment or quasi-payment is made under an arrangement and the payee is a multinational company — meaning it is tax-resident in one territory but carries on business through a permanent establishment in another territory.
• There must be a UK connection: either the payer is within the charge to UK corporation tax, or the multinational company is UK resident and there is a mismatch between the parent jurisdiction and the PE jurisdiction as to whether a permanent establishment exists.
• It must be reasonable to suppose that, ignoring these mismatch rules and any equivalent overseas provisions, a deduction/non-inclusion mismatch would arise from the payment or quasi-payment.
• There must be a relationship or structural link: either the payer is also a payee (for quasi-payments), the payer and multinational company are in the same control group, or the arrangement is structured to exploit the mismatch — even if it also has a commercial purpose.