The guidance is provided to assist understanding of the application of the hybrid mismatch rules which apply from 1 January 2017.
HMRC have published draft guidance on the application of the hybrid and other mismatch legislation, which takes effect from 1 January 2017. The guidance largely follows the legislation and incorporates previous draft examples based upon a selection of those contained within the OECD ‘Final Report on Neutralising the Effects of Hybrid Mismatch Arrangements’, with additional draft examples dealing with hybrid transfers and permanent establishments.
We would highlight the following points:
In general, the draft guidance states that, when considering whether the rules should apply, parties should take all reasonable steps to establish whether a mismatch will arise, taking account of the relevant tax laws of the territories involved and the relevant facts and circumstances.Comments on the draft guidance have been requested by 10 March 2017. HMRC have noted that the guidance is a work in progress and we expect further clarity to be provided in specific areas such as interest free loans.
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