INTM559210 - Hybrids: imported mismatches (Chapter 11): conditions to be satisfied: condition A

Condition A of s259KA asks whether a payment or quasi-payment (the imported mismatch payment) has been made under, or in connection with, an arrangement (the imported mismatch arrangement).

A payment is any transfer of money or money’s worth in relation to which an allowable deduction would arise in calculating the taxable profits of the payer if Part 6A (or a non-UK equivalent of Part 6A) did not apply.

The payer is the person from whom the transfer is made.

An amount is a quasi-payment if

• an allowable deduction would arise in calculating the taxable profits of the payer, if Part 6A (or a non-UK equivalent of Part 6A) did not apply, and
• the circumstances giving rise to the deduction may reasonably be expected to result in ordinary income of one or more persons were certain assumptions to apply

See INTM550540 for more detail on quasi-payments. There is nothing to prevent an amount satisfying the definition of being both a payment and a quasi-payment.

Deductions deemed to arise for tax purposes under the law of the payer jurisdiction are not quasi-payments where the circumstances giving rise to the deduction do not include economic rights between the payer and a payee.

S259NF defines an arrangement to include any agreement, understanding, scheme, transaction, or series of transactions (whether legally enforceable or not).