Taxation (International and Other Provisions) Act 2010 section 259DF

Counteraction where the payer is within the charge to corporation tax for the payment period

Section 259DF sets out the primary counteraction for hybrid transfer mismatches where the payer is a UK corporation tax payer, by reducing the deduction available to the payer by the amount of the mismatch.

• This section applies when the payer in a hybrid transfer arrangement is within the charge to UK corporation tax for the relevant payment period.
• The deduction that the payer would otherwise claim against its income is reduced by the amount of the hybrid transfer deduction/non-inclusion mismatch identified under section 259DA.
• This represents the primary response to a hybrid transfer mismatch, taking effect in the payer's jurisdiction (the UK) before any defensive measure applies in another jurisdiction.
• The reduction applies for corporation tax purposes only and is calculated for the specific payment period in which the mismatch arises.