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HMRC internal manual

Double Taxation Relief Manual

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Double Taxation Relief Manual: Guidance by country: United States of America: Partnerships, trusts and estates

The provisions, so far as the United Kingdom is concerned are, in substance, unchanged between the 1975 and the 2003 Agreement.

Old agreement (applies up to 30th April 2003 for US withholding taxes, up to 31st December 2003 for other US taxes and 31st March and 5th April 2003 respectively for UK CT and IT).

Partnerships, trusts and estates are regarded as ‘persons’ (Article 3(1)(c)), but are treated as residents of a particular country only to the extent that their income is taxed in that country as the income of a resident. The effect of these provisions, so far as the United Kingdom is concerned, is as follows

Where a United Kingdom partnership consists of or includes members who are resident in the United Kingdom, those members may collectively claim to be a ‘resident of the United Kingdom’ for the purposes of the agreement. In practice the result will be the same as though each United Kingdom member had pursued individually, as regards his share of the partnership income, any claims he may have under the agreement as a ‘resident of the United Kingdom’.

A United Kingdom discretionary or accumulation trust is a ‘resident of the United Kingdom’ as long as at least one trustee resides in the United Kingdom and it may claim through that trustee the benefit of any of the provisions of the agreement.

A United Kingdom trust, other than a discretionary or accumulation trust, may similarly claim to be a ‘resident of the United Kingdom’ but this will in practice add nothing to the rights which those beneficiaries possess individually under the agreement.

The estate of a deceased person is a ‘resident of the United Kingdom’ as long as the income of the estate, wherever arising, is taxable in the United Kingdom in the hands of one or more personal representatives residing in the United Kingdom.

Guidance concerning partnerships consisting in whole or in part of US resident partners are to be found at DT1750.

New agreement

Partnerships, trustees and estates are still regarded as ‘persons’ (Article 3(1)(a)) but, as in the old Agreement, are treated as residents of a particular country only to the extent that their income is taxed in that country as the income of a resident. See in this connection the guidance in relation to Article 1(8).