INTM556070 - Hybrids: multinational payee (Chapter 8): conditions to be satisfied: condition E

Condition E of s259HA is satisfied where one of the following applies

• (for a quasi-payment only) the payer is also a payee
• (for a payment or quasi-payment) the payer and the multinational payee are in the same control group at any time from when the arrangement is made to the last day of the payment period, or
• (for a payment or quasi-payment) the arrangement is a structured arrangement

A payer may also be a payee in respect of a quasi-payment only where the UK is not the payer jurisdiction, and the payee

• is an entity that is not a separate person from the payer under UK tax law, and
• is an entity that is a separate person from the payer for tax purposes in the payer’s jurisdiction, and
• it would be reasonable to expect that entity to have an amount of ordinary income arising as a result of the circumstances giving rise to the quasi-payment

Control groups

Control groups are defined at s259NB, and more detailed guidance on control groups is at INTM550610.

Structured arrangements

An arrangement is a structured arrangement if it is reasonable to suppose that

• it is designed to secure a multinational payee deduction/non-inclusion mismatch, or
• the terms of the arrangement share the economic benefit of the mismatch between the parties to that arrangement, or the terms of the arrangement otherwise reflect an expected mismatch

An arrangement designed to secure a commercial or other objective may also be designed to secure a hybrid payee deduction/non-inclusion mismatch. When considering this issue, the test is whether it is reasonable to suppose that the arrangement was designed to secure the mismatch, regardless of any other objective.

It is likely, but not essential, that all parties would be aware that the instrument or arrangement may create a relevant mismatch whether by virtue of its structure, terms, conditions or simply that the price reflects that benefit.