F1PART 6AHybrid and other mismatches

Annotations:
Amendments (Textual)
F1

Pt. 6A inserted (with effect in accordance with Sch. 10 paras. 18-21 of the amending Act) by Finance Act 2016 (c. 24), Sch. 10 para. 1

CHAPTER 14Interpretation

Financial instruments

259NMeaning of “financial instrument”

1

A “financial instrument” means—

a

an arrangement profits or deficits arising from which would, on the assumption that the person to whom they arise is within the charge to corporation tax, fall to be brought into account for corporation tax purposes in accordance with Part 5 or 6 of CTA 2009 (loan relationships and relationships treated as loan relationships),

b

a contract profits or losses arising from which would, on the assumption that the person to whom they arise is within the charge to corporation tax, fall to be brought into account for corporation tax purposes in accordance with Part 7 of CTA 2009 (derivative contracts),

c

a type 1, type 2 or type 3 finance arrangement for the purposes of Chapter 2 of Part 16 of CTA 2010 (factoring of income etc: finance arrangements),

d

a share forming part of a company's issued share capital or any arrangement that provides a person with economic rights corresponding to those provided by holding such a share, or

e

anything else that is a financial instrument.

2

In subsection (1)(e) “financial instrument” has the meaning that it has for the purposes of UK generally accepted accounting practice.

3

But “financial instrument” does not include—

a

a hybrid transfer arrangement (within the meaning given by section 259DB), or

b

anything that is a regulatory capital security for the purposes of the Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209) (as amended from time to time).

4

Subsection (3)(b) is subject to any provision to the contrary that may be made by regulations under section 221 of FA 2012 (tax consequences of financial sector regulation).

Relevant investment funds

259NAMeaning of “relevant investment fund”

1

“Relevant investment fund” means—

a

an open-ended investment company within the meaning of section 613 of CTA 2010,

b

an authorised unit trust within the meaning of section 616 of that Act, or

c

an offshore fund within the meaning of section 354 of this Act (see section 355),

which meets the genuine diversity of ownership condition (whether or not a clearance has been given to that effect).

2

“The genuine diversity of ownership condition” means—

a

in the case of an offshore fund, the genuine diversity of ownership condition in regulation 75 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), and

b

in the case of an open-ended investment company or an authorised unit trust, the genuine diversity of ownership condition in regulation 9A of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964).

Partnerships

259NETreatment of a person who is a member of a partnership

1

This section applies where a person is a member of a partnership.

2

Any reference in this Part to income, profits or an amount of the person includes a reference to the person's share of (as the case may be) income, profits or an amount of the partnership.

3

For this purpose “the person's share” of income, profits or an amount is determined by apportioning the income, profits or amount between the partners on a just and reasonable basis.

4

In this section—

a

“partnership” includes an entity established under the law of a territory outside the United Kingdom of a similar character to a partnership, and

b

“member” of a partnership is to be read accordingly.

Definitions

259NFDefinitions

In this Part—

  • “arrangement” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

  • “CFC” and “CFC charge” have the meaning given by section 259B(4);

  • “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

  • “control group” has the meaning given by section 259NB;

  • “financial instrument” has the meaning given by section 259N;

  • “foreign CFC” and “foreign CFC charge” have the meaning given by section 259B(4);

  • “hybrid entity” has the meaning given by section 259BE;

  • “investor”, in relation to a hybrid entity, has the meaning given by section 259BE(4);

  • “investor jurisdiction” has the meaning given by section 259BE(4);

  • “ordinary income” is to be read in accordance with sections 259BC and 259BD;

  • “payee”—

    1. a

      in relation to a payment, has the meaning given by section 259BB(6)(a), and

    2. b

      in relation to a quasi-payment, has the meaning given by section 259BB(6)(b);

  • “payee jurisdiction” has the meaning given by 259BB(9);

  • “payer”—

    1. a

      in relation to a payment, has the meaning given by section 259BB(1)(a), and

    2. b

      in relation to a quasi-payment, has the meaning given by section 259BB(2);

  • “payment” has the meaning given by section 259BB(1);

  • “payment period”—

    1. a

      in relation to a payment, has the meaning given by section 259BB(1)(b), and

    2. b

      in relation to a quasi-payment, has the meaning given by section 259BB(2);

  • “permanent establishment” has the meaning given by section 259BF;

  • “quasi-payment” has the meaning given by section 259BB(2) to (5);

  • “related” has the meaning given by section 259NC;

  • “relevant deduction”—

    1. a

      in relation to a payment, has the meaning given by section 259BB(1)(b), and

    2. b

      in relation to a quasi-payment, has the meaning given by section 259BB(2)(a);

  • “relevant investment fund” has the meaning given by section 259NA;

  • “tax” has the meaning given by section 259B;

  • “taxable period” means—

    1. a

      in relation to corporation tax, an accounting period,

    2. b

      in relation to income tax, a tax year,

    3. c

      in relation to the CFC charge, a relevant corporation tax accounting period (within the meaning given by section 371BC(3)),

    4. d

      in relation to a foreign CFC charge, a period (by whatever name known) that corresponds to a relevant corporation tax accounting period, and

    5. e

      in relation to any other tax, a period for which the tax is charged;

  • “taxable profits” is to be read in accordance with sections 259BC(2) and 259BD(5).