[F1259IACircumstances in which the Chapter appliesU.K.
(1)This Chapter applies if conditions A to C are met.
(2)Condition A is that there is an amount or part of an amount that, disregarding the provisions mentioned in subsection (3), it is reasonable to suppose—
(a)could be deducted from the income of a hybrid entity for the purposes of calculating the taxable profits of that entity for a taxable period (“the hybrid entity deduction period”), and
(b)could also be deducted, under the law of the investor jurisdiction, from the income of an investor in the hybrid entity for the purposes of calculating the taxable profits of that investor for a taxable period (“the investor deduction period”).
(3)The provisions are—
(a)this Chapter and Chapter 10, and
(b)any equivalent provision under the law of a territory outside the United Kingdom.
(4)In this Chapter the amount or part of an amount mentioned in subsection (2) is referred to as “the hybrid entity double deduction amount”.
(5)Condition B is that—
(a)the investor is within the charge to corporation tax for the investor deduction period, or
(b)the hybrid entity is within the charge to corporation tax for the hybrid entity deduction period.
(6)Condition C is that—
(a)the hybrid entity and any investor in it are related (see section 259NC) at any time—
(i)in the hybrid entity deduction period, or
(ii)in the investor deduction period, or
(b)an arrangement, to which the hybrid entity or any investor in it is party, is a structured arrangement.
(7)An arrangement is “structured” if it is reasonable to suppose that—
(a)the arrangement is designed to secure the hybrid entity double deduction amount, or
(b)the terms of the arrangement share the economic benefit of that amount being deductible by both the hybrid entity and the investor between the parties to the arrangement or otherwise reflect the fact that the amount is expected to arise.
(8)The arrangement may be designed to secure the hybrid entity double deduction amount despite also being designed to secure any commercial or other objective.
(9)Sections 259IB (cases where the investor is within the charge to corporation tax for the investor deduction period) and 259IC (cases where the hybrid entity is within the charge to corporation tax for the hybrid entity deduction period) contain provision for the counteraction of the hybrid entity double deduction amount.]
Textual Amendments
F1Pt. 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