The Finance Bill 2021 delivers significant amendments to the hybrid mismatch rules, some of which are treated as having always had effect. There are a number of welcome changes designed to ensure that the rules operate more proportionately. In particular, an extension of the dual inclusion income concept to capture ‘deemed’ dual inclusion income; an ability to surrender surplus dual inclusion income within a group; a tightening of the definition of hybrid entity; and a narrowing of what constitutes an illegitimate overseas deduction. However, the amendments leave several known issues unaddressed and so some taxpayers with commonly encountered structures still face economic double taxation.
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The Finance Bill 2021 delivers significant amendments to the hybrid mismatch rules, some of which are treated as having always had effect. There are a number of welcome changes designed to ensure that the rules operate more proportionately. In particular, an extension of the dual inclusion income concept to capture ‘deemed’ dual inclusion income; an ability to surrender surplus dual inclusion income within a group; a tightening of the definition of hybrid entity; and a narrowing of what constitutes an illegitimate overseas deduction. However, the amendments leave several known issues unaddressed and so some taxpayers with commonly encountered structures still face economic double taxation.
If you are not a subscriber, subscribe now to read this content.
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