HMRC internal manual

Inheritance Tax Manual

Foreign property: Double Taxation Conventions: certificate of tax paid: USA

Where relief takes the form of a simple waiver of taxing rights by one of the two countries, a special instruction applies (IHTM27177).

Where a double taxation credit is due you may allow the amount claimed on form IHT400 provisionally but the case must not be closed until the payment has been certified by the US authorities on Form 742.

If a credit seems appropriate, send the taxpayer or their agent two prints of Form 742, available from Technical. Ask them to complete the forms and to send both copies to the Washington address on the reverse

Internal Revenue Service, 1111 Constitution Avenue NW:SE:LB:IN:ADCI:EOI M4-360, Washington DC 20224, United States of America.

One of these copies is certified and returned to this office and the other is retained by the US authorities. The certified form must be checked and the appropriate credit allowed. If you have any difficulty applying the Double Taxation Convention or calculating the tax attributable to the property, please seek advice from Technical.

The credit given cannot be more than the amount of tax payable in the UK on the property concerned.

Certificate of IHT paid for the US authorities

The US form 706 CE is forwarded to this Office in duplicate to be certified by us. The forms must be checked, but you must make sure you do not mark the forms themselves in any way. Send the forms and the file with a note of any error or omission to Technical once all the tax has been paid. If there no further queries and all the tax has been paid, Technical will arrange for one copy to be certified and sent with a schedule of any necessary amendments to the US authorities; the other copy is filed. The taxpayer is informed that the certificate has been sent and is provided with a copy of any amending schedule.

Where a certificate of tax paid cannot be issued on application - because the amount of tax has not been finalised and paid - you should explain this to the taxpayer or agents. You should also remind them that they can lodge a provisional claim for a credit with the US authorities (although there is a time limit under Article 9). When the case is ready you should refer the application and the file to Technical to issue the certificate.

If there is any adjustment of tax after a certificate has been issued the file must again be referred to Technical to issue an amending certificate.