F1PART 6AHybrid and other mismatches

Annotations:
Amendments (Textual)
F1

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

CHAPTER 2Key definitions

Payments and quasi-payments etc

259BBMeaning of “payment”, “quasi-payment”, “payer”, “payee” etc

1

In this Part “payment” means any transfer—

a

of money or money's worth directly or indirectly from one person (“the payer”) to one or more other persons, and

b

in relation to which (disregarding this Part and any equivalent provision under the law of a territory outside the United Kingdom) an amount (a “relevant deduction”) may be deducted from the payer's income for a taxable period (the “payment period”) for the purposes of calculating the payer's taxable profits.

2

For the purposes of this Part, there is a “quasi-payment”, in relation to a taxable period (the “payment period”) of a person (“the payer”), if (disregarding this Part and any equivalent provision under the law of a territory outside the United Kingdom)—

a

an amount (a “relevant deduction”) may be deducted from the payer's income for that period for the purposes of calculating the payer's taxable profits, and

b

making the assumptions in subsection (4), it would be reasonable to expect an amount of ordinary income to arise to one or more other persons as a result of the circumstances giving rise to the relevant deduction.

3

But a quasi-payment does not arise under subsection (2) if—

a

the relevant deduction is an amount that is deemed, under the law of the payer jurisdiction, to arise for tax purposes, and

b

the circumstances giving rise to the relevant deduction do not include any economic rights, in substance, existing between the payer and a person mentioned in subsection (2)(b).

4

The assumptions are that (so far as would not otherwise be the case)—

a

any question as to whether an entity is a distinct and separate person from the payer is determined in accordance with the law of the payer jurisdiction,

b

any persons to whom amounts arise, or potentially arise, as a result of the circumstances giving rise to the relevant deduction adopt the same approach to accounting for those circumstances as the payer, and

c

any persons to whom amounts arise, or potentially arise, as a result of those circumstances—

i

are, under the law of the payer jurisdiction, resident in that jurisdiction for tax purposes, and

ii

carry on a business, in connection with which those circumstances arise, in the payer jurisdiction.

5

In this Part—

a

references to a quasi-payment include all the circumstances giving rise to the relevant deduction mentioned in subsection (2)(a), and

b

references to a quasi-payment being made are to those circumstances arising.

6

In this Part “payee” means—

a

in the case of a payment, any person—

i

to whom the transfer is made as mentioned in subsection (1)(a), or

ii

to whom an amount of ordinary income arises as a result of the payment, and

b

in the case of a quasi-payment, any person—

i

to whom it would be reasonable to expect an amount of ordinary income to arise as mentioned in subsection (2)(b), or

ii

to whom an amount of ordinary income arises as a result of the quasi-payment.

7

For the purposes of this Part, in the case of a quasi-payment, the payer is “also a payee” if—

a

an entity is not a distinct and separate person from the payer for the purposes of a tax charged under the law of the United Kingdom,

b

that entity is a distinct and separate person from the payer for the purposes of a tax charged under the law of the payer jurisdiction, and

c

it would be reasonable to expect an amount of ordinary income to arise to that entity as mentioned in subsection (2)(b).

8

In this section “payer jurisdiction” means the jurisdiction under the law of which the relevant deduction may (disregarding this Part and any equivalent provision under the law of a territory outside the United Kingdom) be deducted.

9

In this Part “payee jurisdiction”, in relation to a payee, means a territory in which—

a

the payee is resident for tax purposes under the law of that territory, or

b

the payee has a permanent establishment.