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HMRC internal manual

International Manual

Description of double taxation agreements: Mutual agreement procedure

If a resident of one country thinks that the action of the taxation authorities of either their own or the other country has resulted or will result in taxation which is not in accordance with the agreement, they may ask the competent authority of their own country to intervene. The usual situation is where one country’s resident considers that the other country is incorrectly interpreting the agreement and imposing tax which the agreement does not entitle it to. They may ask the competent authority to intervene, even though there may be a remedy under the domestic law of the other country, for example by way of an appeal to the courts.

If the competent authority considers that the objection of the taxpayer is justified, it will try to reach a satisfactory solution with the competent authority of the country which has imposed, or is intending to impose, the tax, so that double taxation can be avoided. There are no provisions within the treaty to deal with a situation where the two competent authorities are unable to find a solution but in general every endeavour will be made by the competent authorities to reach agreement.

If a taxpayer says they want to ask the United Kingdom competent authority to intervene, they should be advised to write to CSTD, Business Assets & International, Tax Treaty Team, 10 South Colonnade. Canary Wharf, London NE98 1ZZ. The taxpayer should provide a full statement of the facts, of their contentions and of the contentions of the tax authorities in the other country and copies of any correspondence between them or their agent and those tax authorities.

More guidance is given at INTM470020 and INTM161320.