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HMRC internal manual

General Insurance Manual

HM Revenue & Customs
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Non-resident insurers: scope of UK taxing rights: double taxation treaties

ICTA88/S788 provides that domestic law is subject to treaty arrangements. The interpretation of treaties depends not just on their words, but on the intentions of the signatories. This means that the guidance reflected in the OECD’s Commentary on the Model Convention has great significance. The Revenue view was and is that there is no fundamental inconsistency between the corporation tax charging provisions and tax treaties – see GIM10122. The FA03 changes, however, make more explicit the application in UK law of the arm’s length principle as reflected in Article 7 of the OECD Model.

The effect of a treaty may be to curtail UK taxing rights as set out, for example, at ICTA88/S11, but it does not found a charge where there is none in domestic legislation. In practice, the consistency principle means that the Article 7 approach is in general considered to apply even when there is no treaty, as reflected in UK law. Some treaties may provide for specific treatments of insurance business, notably those with Australia, Barbados, Belgium, France, Ireland (life only), Jamaica, Kenya, New Zealand and South Africa (life only). The International Manual (INTM151000 and INTM161000+) gives more guidance on double taxation treaties.