Policy paper

Double taxation: Powers to implement Multilateral Instrument

Published 22 November 2017

Who is likely to be affected

This measure amends the UK’s statutory powers to give effect to international arrangements relating to the relief of double taxation. It will have no direct impact on taxpayers or business.

General description of the measure

The amendments to the existing powers will confirm that they extend to giving effect to arrangements that operate primarily to restrict relief provided for in existing arrangements and delegate specific functions to competent authorities.

Policy objective

This measure ensures that the UK can give full effect to the provisions of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting which it signed on 7 June 2017.

Background to the measure

The reports on the 15 actions that made up the OECD/G20 Base Erosion and Profit Shifting (BEPS) project included a number of recommendations for changes to double taxation agreements (DTAs). These included minimum standards agreed by countries participating in the BEPS project in relation to preventing treaty abuse and improving dispute resolution.

To ensure that these changes are made to DTAs as soon as possible, a group of over 100 jurisdictions together drew up the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Multilateral Instrument or MLI). The text of the MLI was adopted in November 2016 and has now been signed by over 70 countries, including the UK.

The MLI modifies DTAs both in order to prevent tax avoidance and improve dispute resolution. In order for the MLI to modify UK DTAs, it must be given effect in UK law. This measure ensures that the existing powers for giving effect to DTAs in UK law, which have previously only been used to give effect to bilateral arrangements, can also be used to give full effect to the MLI.

The measure was announced at Autumn Budget 2017.

Detailed proposal

Operative date

The measure will take effect on the date of Royal Assent to Finance Bill 2017-18.

Current law

Current law on double taxation arrangements is in Chapter 1 of Part 2 of the Taxation (International and Other Provisions) Act 2010 (TIOPA) and Chapter V of Part V of the Inheritance Tax Act 1984 (IHTA).

Proposed revisions

Legislation will be introduced in Finance Bill 2017-18 to make changes to section 2 of TIOPA and section 158 of IHTA.

Summary of impacts

Exchequer impact (£m)

2017 to 2018	2018 to 2019	2019 to 2020	2020 to 2021	2021 to 2022	2022 to 2023
nil	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact.

Economic impact

This measure is not expected to have any significant economic impacts.

Impact on individuals, households and families

As a technical measure to amend the UK’s powers to give effect to international arrangements relating to the relief of double taxation it has no impact on taxpayers.

The measure does not impact on family formation, stability or breakdown.

Equalities impacts

This measure has no equalities impact.

Impact on business including civil society organisations

As a technical measure to amend the UK’s powers to give effect to international arrangements relating to the relief of double taxation it has no impact on businesses or civil society organisations.

Operational impact (£m) (HMRC or other)

There will be no significant impact on HM Revenue and Customs (HMRC).

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through communication with affected taxpayer groups.

Further advice

If you have any questions about this change, please email the Tax Treaty Team at taxtreaty.team@hmrc.gsi.gov.uk