Section 259MB | Application of Chapters 3, 4, 5 and 7 ^F1F2

(1)This section applies where—

(a)Chapter 3, 4, 5 or 7 applies in respect of a payment or quasi-payment,

(b)the relevant structured arrangement condition is not met, and

(c)it is reasonable to suppose that a proportion of the payment or quasi-payment is attributable to a person as a result of that person's interest (direct or indirect) in a transparent fund that is the primary fund in relation to that person.

(2)For the purposes of this section, a proportion of a payment or quasi-payment is attributable to a person if, as a result of that payment or quasi-payment—

(a)ordinary income arises to that person, or

(b)would arise if the person were resident for tax purposes in the United Kingdom.

(3)The primary fund in relation to a person is—

(a)where the income arises or would arise because of an indirect interest the person has in a transparent fund as a result of another transparent fund, or a series of transparent funds, having an interest in that first fund, that first fund, or

(b)where the income arises or would arise because of a direct or indirect interest the person has in a single transparent fund, that fund.

(4)The relevant structured arrangement condition is the condition—

(a)where Chapter 3 applies, in section 259CA(6)(c),

(b)where Chapter 4 applies, in section 259DA(6)(c),

(c)where Chapter 5 applies, in section 259EA(7)(c), and

(d)where Chapter 7 applies, in section 259GA(7)(c).

(5)The Chapter in question applies subject to subsection (6).

(6)If it is reasonable to suppose that the proportion of the payment or quasi-payment that is attributable to a person as a result of the person's interest in the primary fund is less than 10% of the relevant amount, that proportion is to be ignored for the purposes of determining the extent of a mismatch under the Chapter in question.

(7)For the purposes of subsection (6) “the relevant amount” means the amount of ordinary income that it would, on the relevant assumption, have been reasonable to expect to arise to the primary fund as a result of—

(a)in the case of a payment, the payment, or

(b)in the case of a quasi payment, the circumstances giving rise to the relevant deduction (see section 259BB(2)).

(8)The relevant assumption is that the primary fund were a person to whom ordinary income would arise as a result of that payment or those circumstances.

(9)Where a person to whom a proportion of the payment or quasi-payment is attributable as a result of the person's interest in the primary fund is connected (within the meaning given by section 1122 of CTA 2010, ignoring subsections (4) and (7) of that section) to another person to whom a proportion is attributable as a result of that person's interest in that same fund, the rights and interests of those persons are to be aggregated (and accordingly if the proportion attributable between them is 10% or more of the relevant amount, that proportion is not to be ignored).