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This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

TIOPA10/S232 to S259 {#}

Note also that the “Tax Arbitrage� provisions in TIOPA10/PT6 ceased to apply with effect for company accounting periods beginning on or after 1 January 2017, at which point they were superseded by the “Hybrid and other Mismatches� provisions of TIOPA10/PT6A.

»Ê¹ÚÌåÓýapp debt cap rules in TIOPA10/PT7 apply to financing expense and income amounts after any adjustments to deductions or receipts made under the arbitrage rules contained in TIOPA10/S232 to S259.

»Ê¹ÚÌåÓýapp tax arbitrage rules apply to companies that use schemes involving certain types of hybrid entities or hybrid instruments for tax avoidance purposes, but only if HMRC issues a notice directing that the legislation applies. If a notice is issued, a company must make or amend its self-assessment taking into account the legislation. Where payments arise or receipts do not arise under a scheme that falls within certain specified descriptions set out in TIOPA10/PT6, the legislation may have the effect of denying a deduction for an expense that would otherwise have been a financing expense amount of a company, or of bringing into account for taxation amounts that would be financing income amounts. Further guidance on the application of the legislation can be found at: .

»Ê¹ÚÌåÓýapp financing expense amounts and financing income amounts of UK group members that are compared under the debt cap rules with the gross finance expenses of the group as a whole are those deductions and receipts that would, apart from TIOPA10/PT7, be brought into account for Corporation Tax purposes.

If relief for a deduction for an amount is denied under the tax arbitrage rules, the amount will not have been brought into account for corporation tax purposes and will not therefore be a financing expense amount under TIOPA10/S313. If an amount becomes taxable under the arbitrage rules, it will have been brought into account for Corporation Tax purposes and will be a financing income amount if it meets any of conditions A to C set out in TIOPA10/S313 (2) to (5).