F1PART 6AHybrid and other mismatches
CHAPTER 9Hybrid entity double deduction mismatches
Counteraction
259IDF2Section 259ID income for the purposes of section 259IC
1
This section applies where—
a
section 259IC applies,
b
the restricted deduction exceeds the dual inclusion income of the hybrid entity (if any) for the hybrid entity deduction period, and
c
conditions A to D are met.
2
Condition A is that—
a
the investor in the hybrid entity makes a payment to the hybrid entity, and
b
no amount is deductible, under the law of the investor jurisdiction, from the income of the investor in respect of the payment.
3
Condition B is that, as a result of the payment, an amount of ordinary income arises to the hybrid entity for the hybrid entity deduction period.
4
Condition C is that the payment is made in direct consequence of a payment made to the investor by a person (“the unrelated party”) who is not related (see section 259NC) to the investor or the hybrid entity.
5
Condition D is that, as a result of the payment made by the unrelated party, an amount of ordinary income arises to the investor.
6
For the purposes of section 259IC “section 259ID income” is an amount of income of the hybrid entity equal to the lesser of—
a
the amount of the payment made by the investor to the hybrid entity, and
b
the amount of the payment made by the unrelated party to the investor.
Pt. 6A inserted (with effect in accordance with Sch. 10 paras. 18-21 of the amending Act) by Finance Act 2016 (c. 24), Sch. 10 para. 1