The definition of ‘related’ in the hybrid rules is extremely broad. Dan Neidle and Jemma Dick (Clifford Chance) explain how this could potentially cause companies to be denied interest deductions on ordinary commercial loans.
The hybrid rules can be found at TIOPA 2010 Part 6A. They were enacted in 2016 in response to Action 2 of the OECD BEPS Project and came into force on 1 January 2017. The hybrid rules are designed to neutralise the effects of certain ‘mismatch arrangements’; in particular by denying a deduction for a payment at the level of a UK payer where a corresponding amount of income is not subject to tax at the level of the payee whether in the UK or elsewhere.
It’s hard to feel too sorry for anyone whose intentional tax arbitrage is kiboshed by the hybrid rules. However the hybrid rules go much further than that...
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The definition of ‘related’ in the hybrid rules is extremely broad. Dan Neidle and Jemma Dick (Clifford Chance) explain how this could potentially cause companies to be denied interest deductions on ordinary commercial loans.
The hybrid rules can be found at TIOPA 2010 Part 6A. They were enacted in 2016 in response to Action 2 of the OECD BEPS Project and came into force on 1 January 2017. The hybrid rules are designed to neutralise the effects of certain ‘mismatch arrangements’; in particular by denying a deduction for a payment at the level of a UK payer where a corresponding amount of income is not subject to tax at the level of the payee whether in the UK or elsewhere.
It’s hard to feel too sorry for anyone whose intentional tax arbitrage is kiboshed by the hybrid rules. However the hybrid rules go much further than that...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
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