INTM557050 - Hybrids: hybrid entity double deduction mismatches (Chapter 9): conditions to be satisfied: condition C

Condition C of s259IA is satisfied where one of the following applies

• the hybrid entity and any investor in it are related at any time in the relevant deduction period, or
• the arrangement, to which the hybrid entity or any investor in it is party to, is a structured arrangement

Related persons is defined at s259NC. More detailed guidance on related persons is at INTM550610 but in broad terms a hybrid entity and an investor are related on any day that

• they are in the same control group, or
• one holds a 25% investment in the other, or
• a third person holds a 25% investment in both entities

Control groups are defined at s259NB. More detailed guidance on control groups is at INTM550610.

Structured arrangement

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

• it is designed to secure a hybrid entity double deduction amount, or
• the terms of the arrangement share the economic benefit of the double deduction between the parties to that arrangement, or the terms of the arrangement reflect the fact that a double deduction was expected to arise

An arrangement designed to secure a commercial or other objective may also be designed to secure a hybrid entity double deduction 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.