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INTM556010 | Hybrids: multinational payee (Chapter 8): overview

From HM Revenue & Customs · International Manual

Chapter 8 of Part 6A TIOPA 2010 counters mismatches where it is reasonable to suppose the mismatch would otherwise arise from payments or quasi-payments, where the payer is within the charge to CT, because a payee is a multinational company.

The chapter counteracts mismatches by altering the CT treatment of the payer.

Multinational company

A multinational company for the purpose of Chapter 8 of Part 6A is defined at s259HA. A company is a multinational company if it is

  • resident for tax purposes in a territory (the parent or head office jurisdiction), and

  • regarded as carrying on a business through a permanent establishment in another territory (whether so regarded under the law of the parent jurisdiction, the PE jurisdiction or any other territory)

Conditions to be satisfied

The legislation applies where 5 conditions in s259HA (A to E) are met.

Condition A

  • there is a payment or quasi-payment under or in connection with an arrangement, see INTM556030

Condition B

  • the payee is a multinational company, see INTM556040

Condition C

  • the payer is within the charge to UK corporation tax, or

  • (from 1 January 2020) the multinational company is UK resident for the payment period, and regarded under UK law as carrying on a business in another territory through a PE, but is not regarded under the law of the PE jurisdiction as doing so, see INTM556050

Condition D

  • it is reasonable to suppose that there would be a mismatch arising by reason of the payee being a multinational company, if the mismatch was not countered by this legislation or equivalent legislation outside the UK, see INTM556060

Condition E

  • the relevant parties are in the same control group, or it is reasonable to suppose the arrangement is a structured arrangement designed to secure the mismatch or under which the economic benefits of the mismatch are shared, see INTM556070

Conteraction

If all 5 conditions are met the mismatch is counteracted by denying all or part of the payer’s deduction.