INTM550080 - Hybrids: introduction: interaction with other legislation

Counteraction under Part 6A TIOPA 2010 should be considered alongside the UK’s other domestic rules. Examples of the type of rules that might be applicable are distribution exemption, transfer pricing, group mismatch legislation and unallowable purpose for loan relationships.

We would expect to apply the hybrid mismatch legislation in priority to the corporate interest restriction rules.

Although there is no statutory provision requiring it to be considered in priority, the distribution exemption provisions may also be considered before applying the hybrid mismatch rules, see INTM551170.

The hybrid mismatch rules do not contain a priority order for considering the application of other legislation. This means that customers will need to consider all relevant rules as part of their self-assessment. In general, the hybrid rules will need to be considered whenever a mismatch within scope of Part 6A arises, unless the application of other rules removes the mismatch entirely.

Interaction with Transfer Pricing

The position set out previously continues to apply – that is, you cannot compare Part 4 and Part 6A and choose to apply one and not the other, nor can you choose to apply the two sets of rules in an order which produces a preferred result. Both sets of provisions must be considered in all cases. HMRC has however refined its view of the interaction of Part 4 and Part 6A, see INTM550085 and INTM550086.

Securitisation companies

The rules in Part 6A TIOPA will not adjust the tax treatment of a company if The Taxation of Securitisation Companies Regulations 2006 apply to it.