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HMRC internal manual

Double Taxation Relief Manual

Non-residents: UK income: Repayment supplement

Repayment supplements payable in accordance with the provisions of ICTA88/S824 and ICTA88/S825 and TCGA92/S283 used only to be payable to individuals who, or to companies which, paid tax for a year of assessment or accounting period for which they were resident in the United Kingdom. Repayment supplement is interest and not a repayment of tax. The non-discrimination Article in a double taxation agreement does not entitle a non-resident individual or company to whom a repayment of tax is due to payment of the supplement where this is not provided for by United Kingdom law, for the reasons given by the High Court in Regina v Commissioners of Inland Revenue ex parte Commerzbank AG (68TC252).

In July 1993 the European Court of Justice held that refusal to pay repayment supplement on a repayment of tax to a company resident in the EC was contrary to the Treaty of Rome. Press releases issued in July and September 1993 invited claims to repayment supplement from EC resident individuals and companies who had received a repayment of tax without supplement since 12 July 1987. For individuals see Extra-statutory concession ESC/A82. (see also IM5205).

With effect from 1 October 1993 all non-resident companies (not just those resident in the EC) are entitled to interest on overpaid tax in accordance with ICTA88/S826 as amended by FA93/SCH14/PARA10. For individuals, repayment supplement continued to be payable only in respect of a repayment made for a year of assessment in which he or she was resident in an EC Member State or in another State of the European Economic Area (including Austria, Finland, Iceland, Norway and Sweden from 1993-94 and Liechtenstein which joined the EEA on 1 May 1995). Residents of the Channel Islands and the Isle of Man did not qualify.

By virtue of FA94/SCH19/PARA41 and FA94/SCH19/PARA46 repayments of Income Tax for 1996-97 onwards (1997-98 onwards in the case of partnerships whose trade etc was set up and commenced before 6 April 1994) and repayments of Capital Gains Tax for 1996-97 onwards shall, where appropriate, be paid with repayment supplement to all non-residents and United Kingdom residents alike.

Cases of doubt or difficulty, including questions of how the repayment supplement is to be calculated, should be referred to CAR PTI Advisory (Bootle).