Hybrids consultation

The measure

The government has announced that it will be undertaking a consultation on aspects of the hybrid mismatch rules.

The rules, which have been in effect since 1 January 2017, counteract arrangements with a hybrid element where that hybridity leads to a tax mismatch. The rules are complex and operate mechanically. The rules can lead to some unexpected outcomes and can have a disproportionate impact on certain sectors such as the funds sector. For example, the rules can disallow a payment even where that payment flows to a tax exempt investor such as a pension fund. 


Who will be affected?

Companies that are subject to the hybrid mismatch rules. 


When will the measure come into effect?

It is expected that the consultation will be launched later this month.

Our view

We welcome the announcement of a consultation which will hopefully ensure that certain aspects of the rules are amended to make them more proportionate and operate as intended.