INTM561720 - Hybrids: operational guidance: non-statutory requests for clarification (clearance applications)

HMRC will, on request, consider clearance applications in respect of the application of the Part 6A hybrid and other mismatch rules in line with the general guidance on non-statutory business clearances in situations where there are points of genuine uncertainty.

In line with a number of similar provisions, HMRC will not consider a clearance application concerning the application of the TAAR provided by Chapter 13 of Part 6A.

Precisely what information the application should contain will depend on the nature of the clarification requested, the nature of the potential mismatch and the entities involved. Consequently, it is not feasible to list the information required in all circumstances, but the more relevant information provided with the initial application, the greater the likelihood it can be considered without the need for the provision of additional information.

HMRC would expect to receive the following information in all applications

  • A clear indication at the start of the application as to what chapters and particular legislation the request for clearance refers to and for which accounting periods
  • Details of the UK resident company, or UK permanent establishment of a foreign company, potentially impacted by the hybrid’s mismatches legislation, including the name, registered office address and UTR of each such UK company, and the counteraction expected by each if the there is a mismatch
  • Details of any non-UK entities involved in the mismatch arrangements, including the name and address of each entity
  • A description of all business undertaken by all the entities relevant to understanding the application. Any anticipated changes in subsequent accounting periods should also be detailed
  • The nature and extent of all direct or indirect transactions or arrangements relevant to the application. Any anticipated changes in subsequent accounting periods should also be detailed
  • Details of the group and UK ownership structure
  • Diagrams of the relevant part of the overall group structure that contains the entities involved in the potential hybrid mismatch (and any other connected entities with which these transact or are involved in an arrangement) together with the UK connection clearly detailed. Where changes are expected in the group structure it would be helpful for anticipated changes to be highlighted
  • A full description of the overall structure, arrangements and transactions relevant to the application of the hybrid mismatches legislation. This should include any step plans, diagrams, group structure, contracts, agreements or other relevant documents that cover the various stages of the arrangements
  • Tax analysis for the specific legislation in relation to which clearance is sought, providing both the UK and anticipated foreign tax treatment