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HMRC internal manual

International Manual

From
HM Revenue & Customs
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UK residents with foreign income or gains: double taxation relief: Unilateral relief

TIOPA10/S9 provides that unilateral relief is only due for taxes which are charged on income or chargeable gains and which correspond to UK Income Tax, Corporation Tax or Tax on Chargeable Gains. Under TIOPA10/S9(6) credit may also be given for taxes payable under the law of a province, state or other part of a country or which are levied by or on behalf of a municipality or other local body, provided that such taxes are charged on income.

SP7/91 was issued in July 1991 following the decision in Yates v GCA International Ltd (64TC37), in which a Venezuelan tax calculated at a rate of 25 per cent on an amount representing 90 per cent of the gross receipts of the business was held to be admissible for credit relief. The Statement of Practice, in the context of business profits, refers to the importance of examining the foreign tax within its legislative context in the other country and deciding whether it serves the same function as income tax and corporation tax serve in the UK in relation to the profits of the business. Turnover taxes, as such, are not admissible for relief. Refer to CTISA Business International, Tax Treaty Team any claim that a foreign tax previously regarded as inadmissible for unilateral credit relief should now be admitted on the basis of Statement of Practice SP7/91.