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HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
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Double Taxation applications and claims:- applicants/claimants: partnerships: Examination of claims

What Personal Tax International will do

Where you are able to conclude that all of the beneficial owners of the income for which relief is being claimed are “qualifying persons” within the meaning of a DTA, then you should process the claim in the normal way without further enquiry. This includes asking the tax office for the UK payer of the income to complete a report on forms in the 4450 series as appropriate.

If the supplementary information that is supplied with the claim form does not allow you to conclude that each of the partners is resident for tax purposes in the same country as that in which the partnership is established, you will have to ask for further information to be supplied.

If any of the partners that are identified are themselves (at face value) transparent for tax purposes (for instance Limited Partnerships and Limited Liability Companies, as well as Trusts and some types of investment funds) you should ask for similar information to be supplied about these 2nd and 3rd level partners. Your aim should be to reach a reasonable level of assurance that all of the underlying participators in these concerns are themselves “persons” who would be able to claim double taxation relief if they were receiving the money directly rather than through the partnership.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Where the partnership is unable to provide sufficient information about the identity of its partners to allow you to be satisfied that each person is entitled to relief from UK tax, the amount of relief to be allowed must be restricted to the percentage share of the income that is attributable to the partners who you accept as being entitled to treaty benefits in their own right.

Some relief at source considerations

There are two main ways in which Personal Tax International gives DT treaty relief.

The first is by meeting a claim for repayment of all or some of the withholding tax deducted by a UK payer from a payment or payments already made. This is the “default” method by which the UK is obliged to honour its commitments under a DT treaty.

A resident of another country has the potential only to establish such a claim under the DTA. It is at the point when a payment is made which suffers tax that the entitlement of the non-resident to treaty relief arises.

In addition, UK law (SI1970/488) gives HMRC the discretion to direct the UK payer, when making future payments, to do so by reference to the terms of a DTA - that is to say, either not deducting tax at all, or deducting it a (treaty) rate which is lower than the statutory rate. This is called “relief at source”.

In deciding whether or not HMRC should exercise this discretion in response to an application for relief at source, we must primarily have regard to the risk that the underlying conditions for relief might change over the lifetime of a Direction (which will normally last no longer than 5 years). Such changes might remove the basis for relief altogether, or in some other way prejudice the amount of tax that the UK is otherwise properly entitled to receive in that period.