Section 259GA | Circumstances in which the Chapter applies

(1)This Chapter applies if conditions A to E are met.

(2)Condition A is that a payment or quasi-payment is made under, or in connection with, an arrangement.

(3)Condition B is that a payee is a hybrid entity (a “hybrid payee”).

(4)Condition C is that—

(a)the payer is within the charge to corporation tax for the payment period,

(b)an investor in a hybrid payee is within the charge to corporation tax for an accounting period some or all of which falls within the payment period, or

(c)a hybrid payee is a limited liability partnership.

(5)Condition D is that it is reasonable to suppose that, disregarding the provisions mentioned in subsection (6), there would be a hybrid payee deduction/non-inclusion mismatch in relation to the payment or quasi-payment (see section 259GB).

(6)The provisions are—

(a)this Chapter and Chapters 8 to 10, and

(b)any equivalent provision under the law of a territory outside the United Kingdom.

(7)Condition E is that—

(a)it is a quasi-payment that is made as mentioned in subsection (2) and the payer is also a hybrid payee (see section 259BB(7)),

(b)the payer and a hybrid payee or an investor in a hybrid payee are in the same control group (see section 259NB) at any time in the period—

(i)beginning with the day on which the arrangement mentioned in subsection (2) is made, and

(ii)ending with the last day of the payment period, or

(c)that arrangement is a structured arrangement.

(8)The arrangement is “structured” if it is reasonable to suppose that—

(a)the arrangement is designed to secure a hybrid payee deduction/non-inclusion mismatch, or

(b)the terms of the arrangement share the economic benefit of the mismatch between the parties to the arrangement or otherwise reflect the fact that the mismatch is expected to arise.

(9)The arrangement may be designed to secure a hybrid payee deduction/non-inclusion mismatch despite also being designed to secure any commercial or other objective.

(10)The following provisions contain provision for the counteraction of the hybrid payee deduction/non-inclusion mismatch—

(a)section 259GC (cases where the payer is within the charge to corporation tax for the payment period),

(b)section 259GD (cases where an investor in a hybrid payee is within the charge to corporation tax), and

(c)section 259GE (cases where a hybrid payee is a limited liability partnership).