INTM553060 - Hybrids: hybrid payer (Chapter 5): conditions to be satisfied: condition D

Condition D of s259EA TIOPA 2010 asks whether it is reasonable to suppose that, if certain chapters of Part 6A (or equivalent non-UK legislation) did not apply, there would be a relevant deduction/non-inclusion mismatch (‘hybrid payer deduction/non-inclusion mismatch’) in relation to the payment or quasi-payment.

The test is whether a relevant deduction/non-inclusion mismatch would arise if Chapters 5 to 10 of Part 6A (or any equivalent non-UK legislation) did not apply.

There is no definition of the term ‘reasonable to suppose’ in Part 6A, so the phrase will take its ordinary meaning. Generally, this does not require either party to know how the transaction has in fact been treated by the counterparty, but only that, given the facts and circumstances, it would be reasonable to conclude that a mismatch may arise.

See INTM553080 for the requirements for a deduction/non-inclusion mismatch to be a hybrid payer deduction/non-inclusion mismatch.