Global Tax Adviser, January 12, 2016.The UK has published 85 pages of draft examples to help taxpayers understand how to apply recently released draft legislation related to hybrid mismatches. The hybrid mismatch legislation was included in the UK's December 9, 2015 release of draft provisions for its forthcoming 2016 Finance Bill. These recently released examples are based on existing ones within the OECD's "Final Report on Neutralising the Effects of Hybrid Mismatch Arrangements", with some additional examples dealing with hybrid transfers. The examples are not exhaustive; they are designed to illustrate how the draft UK legislation is intended to apply to the range of hybrid mismatch arrangements considered by the OECD report.
These draft examples confirm that the anti-hybrid rules are not intended to apply to deemed interest payments on interest-free loans. Further guidance on the application of the hybrid rules will be provided in 2016.
The examples cover the following topics:
Readers are cautioned that the example regarding "Release from a debt obligation not a payment" does not appear to be correct. It states that the forgiveness of a debt is a â€˜payment' for the purposes of the anti-hybrid rules-this is not in line with the analysis set out in Example 1.20 of the OECD report, which this example is supposed to be based on.
Otherwise, the examples are in line with expectations.
For more information see TaxNewsFlash "Hybrid and other mismatches: HMRC examples published", or contact your KPMG adviser
Information is current to January 12, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500