HMRC has published the summary of responses and updated draft guidance following its consultation on the hybrids mismatch legislation published in December. HMRC received 44 responses from stakeholders and nine stakeholder meetings and has incorporated some of the suggestions into the updated guidance, together with correcting any inconsistencies.
The main themes identified by respondents include:
FOREX: guidance on FOREX losses has been expanded to address points raised regarding internal hedging;
interest free loans: guidance has been updated to provide a position consistent with Action 2 of the OECD report on hybrid mismatches on interest free loans and deemed deductions;
corporate interest restriction rules: guidance originally has been amended to reflect the introduction of TIOPA 2010 s 259NEA;
just and reasonable: guidance has been rewritten and now includes comment on when it may be just and reasonable to extend the permitted taxable period;
CFC inclusion for ordinary income: guidance as been rewritten and updated for CFC inclusion;
WHT: guidance has been updated to clarify that, consistent with Action 2 of the OECD report on hybrid mismatches, income subject only to WHT is not ordinary income;
imported mismatches: an additional example is included and the existing examples have been amended’ and
reasonable to suppose: new guidance is now included as part of the key definitions.
The hybrid mismatch legislation was introduced by FA 2016, with further changes to be made in the Finance Bill 2017, and takes effect from 1 January 2017.
HMRC has confirmed there is an ongoing engagement with the respondents to provide additional material before the guidance is finalised, with HMRC due to migrate the guidance into the International Manual over the next 6 months, once the additional material has been provided and worked through.
HMRC has published the summary of responses and updated draft guidance following its consultation on the hybrids mismatch legislation published in December. HMRC received 44 responses from stakeholders and nine stakeholder meetings and has incorporated some of the suggestions into the updated guidance, together with correcting any inconsistencies.
The main themes identified by respondents include:
FOREX: guidance on FOREX losses has been expanded to address points raised regarding internal hedging;
interest free loans: guidance has been updated to provide a position consistent with Action 2 of the OECD report on hybrid mismatches on interest free loans and deemed deductions;
corporate interest restriction rules: guidance originally has been amended to reflect the introduction of TIOPA 2010 s 259NEA;
just and reasonable: guidance has been rewritten and now includes comment on when it may be just and reasonable to extend the permitted taxable period;
CFC inclusion for ordinary income: guidance as been rewritten and updated for CFC inclusion;
WHT: guidance has been updated to clarify that, consistent with Action 2 of the OECD report on hybrid mismatches, income subject only to WHT is not ordinary income;
imported mismatches: an additional example is included and the existing examples have been amended’ and
reasonable to suppose: new guidance is now included as part of the key definitions.
The hybrid mismatch legislation was introduced by FA 2016, with further changes to be made in the Finance Bill 2017, and takes effect from 1 January 2017.
HMRC has confirmed there is an ongoing engagement with the respondents to provide additional material before the guidance is finalised, with HMRC due to migrate the guidance into the International Manual over the next 6 months, once the additional material has been provided and worked through.
.jpg?sfvrsn=335a554c_0 "300 x 250 (MPU)")