F1PART 6AHybrid and other mismatches
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.
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