Section 259MC | Application of Chapter 9 ^F1F2

(1)This section applies where—^F1F2

(a)Chapter 9 applies in relation to a hybrid entity double deduction amount (see section 259IA(4)) in respect of an investor in a hybrid entity,^F1F2

(b)the condition in section 259IA(6)(b) is not met, and^F1F2

(c)that investor in the hybrid entity is an investor in it as a result of an interest (direct or indirect) it has in a transparent fund (“the relevant fund”) that directly holds an interest in—^F1F2

(i)the hybrid entity, or^F1F2

(ii)another entity that is not a transparent fund and which holds a direct or indirect interest in the hybrid entity.^F1F2

(2)Chapter 9 applies subject to subsection (3).^F1F2

(3)If it is reasonable to suppose that—^F1F2

(a)some or all of the hybrid entity double deduction amount that relates to the investor arises as a result of the investor's interest in the relevant fund, and^F1F2

(b)the amount that arises as a result of that interest (“the relevant amount”) is less than 10% of the potential double deduction amount,^F1F2

the relevant amount is to be ignored for the purposes of determining the extent of a mismatch under that Chapter.

(4)In this section “potential double deduction amount” means the hybrid double deduction amount that would arise in relation to the relevant fund if it were an investor in the hybrid entity.^F1F2

(5)Where the investor is connected (within the meaning given by section 1122 of CTA 2010, ignoring subsections (4) and (7) of that section) to another investor with an interest in the relevant fund, the rights and interests of those investors are to be aggregated (and accordingly, if the sum of the relevant amounts in respect of each of them is 10% or more of the potential double deduction amount, that proportion is not to be ignored).^F1F2