Section 259ICA | Deemed dual inclusion income for the purposes of section 259IC ^F1F2

(1)For the purposes of section 259IC(10)(b) the reference to ordinary income of an investor in the hybrid entity for a permitted taxable period for the purposes of any tax charged under the law of an investor jurisdiction is taken to include a reference to an amount that meets the following requirements.

(2)The requirements are that—

(a)the amount may not be deducted under the law of any territory from the income of any person for the purposes of calculating taxable profits for a relevant taxable period;

(b)in the case of a person resident for tax purposes in a zero-tax territory, the amount could not be deducted from the income of the person for the purposes of calculating taxable profits for a relevant taxable period if the person were resident in the United Kingdom for tax purposes; and

(c)under the law of the investor jurisdiction, the amount could be deducted from the income of the investor in the hybrid entity for the purposes of calculating the investor's taxable profits for a relevant taxable period if the following assumptions were made.

(3)The assumptions are that, for the purposes of identifying the recipient of the amount for tax purposes in the investor jurisdiction, it is assumed that—

(a)condition B in section 259BE(3) was not met by the hybrid entity as respects the investor jurisdiction, and

(b)as a result of that, the hybrid entity was not a hybrid entity as respects the investor jurisdiction.

(4)In subsection (2), “zero-tax territory”, in relation to a person, means a territory in which the person—

(a)is not within the charge to tax, or

(b)is within the charge to tax at a nil rate.

(5)Section 259B(5) (determination of residence where no concept of residence for tax purposes exists) applies to the reference in subsection (2)(b) to a person's residence for tax purposes in a zero-tax territory as it applies to references to a person's residence for tax purposes in Chapter 8 or 11.

(6)A taxable period of an investor or another person is “relevant” for the purposes of subsection (2) if—

(a)the period begins before the end of 12 months after the end of the accounting period mentioned in section 259IC(10)(a), or

(b)where the period begins after that, it is just and reasonable for the question of whether the amount concerned may or could be deducted in calculating taxable profits to be determined by reference to that taxable period rather than an earlier period.