835AS Imported mismatch outcome

Summary

This section sets out what is meant by imported mismatch outcome and provides the rule to neutralise such an outcome.

Details

(1) Imported mismatch outcome

An imported mismatch outcome shall arise where it would be reasonable to consider that—

(a) a company, within the charge to domestic tax, enters into a transaction, or series of transactions, involving a mismatch outcome where a payment by that company directly or indirectly funds the mismatch outcome, and

(b) the mismatch outcome has not been neutralised in another territory.

The rule for neutralising an imported mismatch outcome

(2) An imported mismatch outcome shall be neutralised by the company being denied a tax deduction for so much of the payment as corresponds to the mismatch outcome which has not been neutralised in another territory.

(3) As this chapter requires the anti-hybrid rules to be applied to transactions between other territories the terms “domestic tax” and “foreign tax” need to be modified accordingly.

“domestic tax” means a tax chargeable on profits or gains, under the laws of a territory in which an entity is established, that is similar to income tax, corporation tax (including a charge under Part 35B) or capital gains tax;

“foreign tax” means a tax chargeable on profits or gains, under the laws of a territory in which the entity is not established, that is similar to income tax, corporation tax (including a charge under Part 35B) and capital gains tax.

Relevant Date: Finance Act 2019