In 2014, the UK government announced the implementation of one of the OCED’s recommendations in the form of the anti-hybrid rules. The anti-hybrid rules seek to remove tax mismatches which can arise between two or more companies where the tax treatment of a particular financial instrument or entity differs in the jurisdictions in question resulting in either; (i) a tax deduction in both companies, or (ii) a tax deduction in one company with no corresponding charge in the other. Draft legislation for the anti-hybrid rules is included in the Finance Bill 2016

Today the Chancellor announced an extension to these already far-reaching rules to also cover mismatches which arise from permanent establishments.

The rules will come into effect from 1 January 2017 and it is anticipated they will result in an additional £950m of tax for the Treasury over the next 5 years, which indicates the extent to which the government considers mismatches are taken advantage of.

Please view our dedicated Budget 2016 hub here. It will give you access to our watch list, our contributors and relevant articles and tweets.