Double Taxation Relief Manual: Guidance by country: United States of America: Agreement
A new UK/US Double Taxation Agreement came into force on 31 March 2003. It has effect from the following dates:
In the United Kingdom for
Taxes withheld at source from 1<sup>s</sup> <sup>t</sup> May 2003 Income Tax (apart from taxes withheld at source) from 2003-04, Capital Gains Tax from 2003-04, Corporation Tax from 1 April 2003, Petroleum Revenue Tax for any chargeable period beginning on or after 1 January 2004
In the United States for
Taxes withheld at source from 1st May 2003; Other taxes from 1 January 2004.
The old agreement (text at DT 19900 to 19929) applies up to those dates.
“Grandfathering” (though not a term found in the treaty itself) means that a claimant can elect, under the provisions of Article 29(3), to have the provisions of the previous treaty apply in their entirety for a period of 12 months from the date on which the new treaty otherwise would have effect under Article 29(2). A claimant may wish to make such an election because the previous treaty provides them with greater benefits than they would be entitled to under the new treaty.
There is no form or set form of words provided for such an election.
If an election is made, the previous treaty will apply, in the United Kingdom for
Taxes withheld at source until 30t h April 2004
Income Tax (apart from taxes withheld at source) for 2003-04,
Capital Gains Tax for 2003-04,
Corporation Tax until 31s t March 2004,
Petroleum Revenue Tax for any chargeable period up to 31s t December 2004
With regard to claims relating to UK source income by US residents, HMRC will consider the provision invoked only where the claimant has expressly asked for it to apply, or has demonstrated a clear and unmistakable intention that it is to apply. The question will need to be determined on the making of the first claim to relief to which Article 29(3) could have relevance. If such an election is made, it will apply to all of the income arising in that 12-month period.
A claimant making such an election will then need to make any claim for the particular class of income to which it relates using the appropriate form for the previous treaty. These forms will continue to be available on HMRC website, or obtainable from them on request, until the statutory time limit for making a claim under United Kingdom tax law (section 43 TMA 1970) expires.
Claims relating to income paid in the year to 5t h April 2004 will have to be made no later than 31 January 2010; claims for the period from 6t h April to 31s t December 2004 will have to be made no later than 31 January 2011.
The text of the Tax Treaty can be found via https://www.gov.uk/government/publications/usa-tax-treaties