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

Countering the effect of avoidance arrangements

Section 259M provides HMRC with the power to counteract tax advantages obtained through avoidance arrangements that are designed to circumvent the hybrid mismatch rules in Part 6A of the Act.

• Where arrangements exist whose main purpose (or one of their main purposes) is to obtain a tax advantage by sidestepping the hybrid mismatch rules, HMRC can make just and reasonable adjustments to a person's corporation tax position to neutralise that advantage.
• A "relevant tax advantage" arises where a person avoids restrictions on deductions, avoids amounts being treated as their income, or artificially creates dual inclusion income, under the hybrid mismatch provisions or equivalent foreign rules.
• Arrangements are not treated as avoidance arrangements if the tax advantage obtained is consistent with both the underlying principles and the policy objectives of the relevant hybrid mismatch provisions.
• In determining those principles and policy objectives, regard may be had to the OECD's October 2015 Final Report on Neutralising the Effects of Hybrid Mismatch Arrangements, or any subsequent replacement or supplementary OECD publication.