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HMRC internal manual

International Manual

Foreign Permanent Establishments of UK Companies: introduction: procedures

Clearance applications

Non-statutory clearance applications that relate to Foreign Branch Exemption legislation should be addressed to the Base Protection Policy Team, CSTD Business, Assets & International at 9th Floor, 10 South Colonnade, Canary Wharf, London E14 4PU. This includes matters concerning the specific provisions in the legislation that relate to Capital Allowances, Capital Gains, Anti-diversion (CFC) rules, Leasing, MODs, the Transitional Provisions, the Intangible Fixed Assets regime, exclusions from branch exemption and elections.

The UK has certain international obligations to exchange information about rulings issued by HMRC. These obligations arise out of bilateral treaties, the EU Directive on Administrative Cooperation in the field of Taxation (the DAC), and Action 5 of the OECD’s Base Erosion and Profit Shifting (BEPS) project.  A FPE clearance is an agreement made between a tax authority and a customer, upon which the customer can rely. This makes it a “ruling” for international taxation purposes, meaning it is very likely to be exchangeable with another jurisdiction:


1.     automatically, under BEPS Action 5;

2.     automatically, under the DAC; or

3.     spontaneously, where it would be foreseeably relevant to advise another jurisdiction.


For more information, including whether, when, and how to exchange such rulings: please consult IEIM500000+ onwards.  There may be information that you will need to collect from the customer, so it is important that you review the guidance on sharing rulings before you reply.

Matters relating to the attribution of profits to an exempt branch will not be considered in such a clearance and in the case of existing branches it will normally be the case that the methodology previously used to calculate the branch profits for DTR purposes will not need to be significantly revised.

However, there may be cases, particularly when a new foreign branch is established, when a company will seek HMRC’s view on how profit attribution principles should apply in relation to a branch for which they want to make an election. The guidance on real-time working will determine to what extent HMRC can enter into discussions on such issues - see INTM471010. If legal certainty is sought about the methodology for attributing profit to an exempt branch, the normal practice and principles that govern APA applications apply (see INTM469010 and Statement of Practice 02/10). That fact that the attribution issue concerns an exempt or potentially exempt branch should not in itself result in any different treatment from that given to any other branch with a profit attribution issue.