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HMRC internal manual

International Manual

Double Taxation applications and claims: relief at source over-allowed: Recovery of tax where relief at source has been over-allowed

You may see cases where relief from UK tax at source has been over-allowed. For example an individual may have returned to the UK permanently, after having lived in a DT country and received relief at source under the DTA on a UK pension. If the relief at source continued after the individual took up permanent residence in the UK the underpaid tax will need to be recovered.

In most cases where the income over-relieved from UK tax is a pension and the individual becomes resident in the UK, you can normally arrange for recovery of any underpaid tax through the PAYE system.

However in other cases where income has been over-relieved under a DTA, the tax can be recovered under the provisions of Regulation 9 of Sl70/488. This authorises the HM Revenue and Customs to

  • raise an assessment on the non-resident


  • issue a direction to the UK payer of the income to deduct the underpaid tax from future net income (from the source of income on which relief was over-allowed ).

Usually the issue of a direction is the first course of action. However, the two methods of recovery mentioned above can be used at the same time. An assessment can be made where it appears that this will reinforce HMRC’s chances of recovering the outstanding amount.

Refer to CSTD, Business, Assets & International, Assets Residence & Valuation any case where you think we should recover tax by assessment or direction.