Finance Act 2021

PART 9 U.K. Imported mismatches

19 U.K. Chapter 11 of Part 6A of TIOPA (imported mismatches) is amended as follows.

20 U.K. In section 259K (overview of chapter), after subsection (4A) insert—

“(4B) Section 259KE sets a limit on reductions under section 259KC.”

21 (1) Section 259KA (circumstances in which Chapter) is amended as follows. U.K.

(2) For subsection (7) substitute—

“(7) Condition E is that it is reasonable to suppose that the relevant mismatch is not capable of counteraction.

(7A) A relevant mismatch is capable of counteraction to the extent it is capable of being considered, for the purposes of determining the tax treatment of a person, other than P, under the law of a territory that is OECD mismatch compliant.

(7B) If a proportion of the relevant mismatch is not capable of being so considered under the law of any such territory—

(a) Condition E is met in relation to that proportion, and

(b) the remainder of the relevant mismatch is to be ignored for the purposes of this Part.

(7C) A determination about the extent to which a relevant mismatch is capable of being so considered is to be made on a just and reasonable basis.

(7D) A territory is OECD mismatch compliant if under the law of that territory effect is given to the Final Report on Neutralising the Effects of Hybrid Mismatch Arrangements published by the Organisation for Economic Cooperation and Development on 5 October 2015 or any replacement or supplementary publication (within the meaning of section 259BA(3)).”

(3) Omit subsection (8).

(4) After subsection (9)(a) for “as the payer, or a payee” substitute “ as a payee ”.

22 U.K. In section 259KC(2A), at the end insert “ and section 259KE (limit on reduction under section 259KC) ”.

23 U.K. After section 259KD insert—

“259KE Limit on reduction under section 259KC

(1) This section applies where, in relation to the imported mismatch payment, the relevant deduction that may be deducted from P's income for a payment period is to be reduced under section 259KC.

(2) The reduction is not to exceed the amount that the relevant mismatch would have been if the amount of the mismatch payment had been equal to the amount of the imported mismatch payment.”