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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: United States of America: Mutual agreement procedure: from 2003

This article authorises the competent authorities of the two countries to endeavour, by mutual agreement, to resolve cases of taxation not in accordance with the treaty and to settle points of doubt or difficulty in its application or interpretation.

Specifically it provides that, where a person considers that the actions of one or both countries will result in taxation not in accordance with the treaty, he may present his case to the competent authority of the country of which he is a resident or national. This right applies irrespective of any remedies provided by domestic law.

The article sets out time limits for the presentation of a case: a case must be presented within three years of the first notification of the action resulting in taxation not in accordance with the treaty or, if later, within six years from the end of the taxable or chargeable period in respect of which that taxation is imposed or proposed.

The time limits in the treaty are compatible with the time limits in UK law. Section 815AA(6) ICTA 1988 provides that cases may be presented for consideration under the mutual agreement procedure before the expiration of 6 years following the end of the chargeable period to which the case relates.

Agreements reached between the competent authorities will be implemented notwithstanding the countries’ domestic time limits or other procedural limitations (except such limitations as apply for the purposes of giving effect to such an agreement).

This time limit is the 12 month period stipulated in UK law for making a claim to relief following mutual agreement (section 815AA(3) ICTA 1988).

The presentation of a case for consideration under the mutual agreement procedure does not in itself constitute a claim to relief. In the absence of a claim the Revenue cannot give relief. Section 815AA(3) ICTA 1988 provides that once mutual agreement has been reached by the competent authorities a claim to relief may be made within 12 months of the notification.