Two amendments have been made to the hybrid mismatch rules to improve the way these rules will work.
Who should read this?
Multinational groups with a UK parent or UK subsidiaries which have arrangements involving a mismatch in tax treatment, whether between the UK and another jurisdiction or between two non-UK jurisdictions as part of an arrangement involving the UK.
Summary of proposal
The UK Government has made technical amendments to the hybrid and other mismatch rules (Part 6A TIOIPA 2010) in two areas.
The changes will apply from the commencement of new hybrid mismatch rules which are effective from 1 January 2017.
Key changes from the draft legislation
Draft clauses for these measures were not published in December so this is the first time we have seen actual legislation. The Finance Bill is completely in line with the technical note outlining the proposals which was published in December.
Removing the need to make permitted period claims should remove a substantial administrative burden from UK companies which are a party to arrangements involving financial instruments and hybrid transfers, in particular those operating in the financial services sector.
Explicitly excluding amortisation deductions from the scope of the relevant deduction/non-inclusion mismatch chapters aligns the UK rules to the OECD recommendations and to our expectations of how the rules were intended to operate.
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