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HMRC internal manual

Corporate Finance Manual

Debt cap: income from EEA group companies: 'all steps taken'

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

All steps must be taken to obtain qualifying EEA tax relief

An important consideration when determining whether the payer in the EEA territory can obtain a deduction or relief for the payment is to consider whether the payer took all steps necessary to obtain the relief.

TIOPA10/S302(4) makes it clear that conditions A or B are not met unless the payer (or some other person) takes every step to secure deductions are taken into account and reliefs are given.

A simple example would be where the EEA tax resident payer must make a claim to receive a tax credit in respect of the payment. If no claim is made this would be an instance where not every step was taken to obtain the relief and, therefore, condition B would not be met.

The requirement for all necessary steps to be taken extends beyond the payer. For example, if relief for the payment can be obtained by transferring a deduction or relief to another party, it is assumed that the other party will make any necessary claim or election. Only if they do so, but relief is denied (or it is clear that the claim, if made, would be rejected) can it be accepted that qualifying tax relief is not available.