INTM555030 - Hybrids: hybrid payee (Chapter 7): conditions to be satisfied: condition A

Condition A of s259GA, TIOPA 2010 requires there to be a payment or quasi-payment made under, or in connection with, an arrangement. Definitions of the key terms for this condition are at s259BB.

A payment is any transfer of money or money’s worth in relation to which an allowable deduction arises in calculating the taxable profits of the payer, if Part 6A (or a non-UK equivalent of Part 6A) did not apply.

The payer is the person who makes the transfer. The payer jurisdiction is the jurisdiction in which the deduction is available for tax purposes.

An amount is a quasi-payment if

• an allowable deduction would arise in calculating the taxable profits of the payer, if Part 6A (or a non-UK equivalent of Part 6A) did not apply, and
• the circumstances giving rise to the deduction may reasonably be expected to result in ordinary income of one or more persons were certain assumptions to apply

See INTM550540 for more detail on quasi-payments.

There is nothing to prevent an amount satisfying the definition of being both a payment and a quasi-payment.

Condition A also requires that the payment or quasi-payment be made under an arrangement. S259NF sets out the definition of an arrangement for the purposes of this legislation to include any agreement, understanding, scheme, transaction, or series of transactions (whether legally enforceable or not).