INTM552180 - Hybrids: hybrid transfers (Chapter 4): the financial trader exclusion – conditions to be satisfied: condition A

Condition A at s259DE(3) is that

• a mismatch arises from a payment or quasi-payment that is a substitute payment. In the illustration in INTM552170 the substitute payment is made to the sister investment entity
• the payment is treated by a person in a manner that reflects the facts that the substitute payment is representative of the underlying return (the underlying shares). In the illustration in INTM552170 the person is the stock loan counterparty. This is the case because the substitute payment received is treated for taxable purposes in the same manner as a real dividend on the stock-lent shares
• the substitute payment is brought into account in computing the taxable profits of a financial trader. In the illustration in INTM552170 this is the UK bank who is the financial trader