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<p>As a matter of corporation tax policy, with the aim of improving financial stability,
the UK allows certain deductions for the costs of regulatory capital. The exemption
referred to helps to ensure that the Hybrid and Other Mismatch Rules act in a way
consistent with this policy. As such, there is no question of any tax revenue being
“lost” as a result of the exemption.</p><p>It is not possible to provide details of
the tax effect arising from the exemption for regulatory capital in section 259N(3)(b),
Chapter 8, Part 6A of the Taxation (International and other Provisions) Act 2010.</p><p>The
Hybrid and other mismatches regime came into force on 1 January 2017. The majority
of corporation tax returns which will reflect the impact of these rules have not yet
been received.</p>
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