Following on from the BEPS project, legislation was introduced in Finance Act 2016 to counter the use of hybrid or mismatch structures. In essence, a hybrid mismatch takes place where an amount is deductible in one jurisdiction but not taxed in any other, or where an amount is deductible more than once. Following the introduction of this legislation, broadly where the UK is the jurisdiction where the deduction is claimed, no deduction will be available. Where the UK is the payee, then the UK will bring a receipt into charge.
Minor changes are to be made to the legislation to ensure that it works as it was intended. Details of these changes have not yet been published.
This will affect international investors who have historically taken advantage of such hybrid instruments.