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HMRC internal manual

International Manual

DT applications and claims: Indofood: Existing and new cases


  1. Representations have been made on behalf of taxpayers who have existing treaty clearances in respect of structures that might now be affected by the Indofood decision. HMRC does not propose to revisit these until clearance expiry, or to take retrospective action to remove treaty benefits, unless it emerges that significant facts were omitted or misrepresented when the clearance was agreed and the issue of beneficial ownership was enquired into before giving the clearance. (For example, if HMRC had enquired into the issue of beneficial ownership in relation to a treaty claim and had not been advised of back to back arrangements). Where existing clearances are reopened and it transpires that the payer’s failure to provide the required information arose from a genuine misunderstanding of the law as now clarified in Indofood, HMRC will only seek to apply withholding tax to payments made since the date of the judgement. Accordingly in most cases, the issue of beneficial ownership will only become relevant when new lending is put in place, or a further clearance period is sought on existing finance arrangements.

Applications to HMRC

  1. Where structures are within the ambit of the Indofood decision, that is to say the structure has the accessing of treaty benefits as one of its effect’s, it is possible that applications to HMRC for benefits under a Double Taxation Convention (DTC) will fall at the first hurdle unless the applicant can demonstrate beneficial ownership. The application might simply be regarded as invalid and never reach the stage where it can be considered in terms of the object and purpose of the particular DTC under which the application is made.
  2. However, where the claimant Special Purpose Vehicle (SPV) does not satisfy the “international fiscal meaning” of beneficial ownership but believes that it is still able to obtain treaty benefits because of the policy confirmed in this guidance, it should make its claim and include a note to that effect. To ease consideration of the claim, the note should include full details as to
* A full structure diagram and explanation of the capital and interest flows;
* why the SPV is considered to be the beneficial owner within the “international fiscal meaning”; or
* demonstrate that the structure does not abuse the DTC under which the claim is made either relating the structure to the examples at INTM332080 or otherwise.