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HMRC internal manual

International Manual

Double Taxation applications and claims: applicants/claimants: partnerships: Special features

Given our duty of care to the UK Exchequer and taxpayer, we have to give particularly careful consideration to the desirability of giving DT treaty relief where transparent concerns such as partnerships are concerned. This is because there is a much higher risk that the beneficial owners of such concerns will change over time. Or that there will be fluctuations in the percentage share of the income that is attributable to each partner that might affect the overall amount of relief from UK tax that is available.

Without calling into question the good faith of claimants we consider that the problem of monitoring this aspect is particularly acute where there are a very large number of investors, or there is an unfeasible number of layers of participation - partners who are themselves partnerships, which themselves contain yet more transparent partners.

For these reasons, although HMRC is willing to entertain any application for relief at source from partnerships, it should be understood that we will be likely to give relief in this way chiefly where

  • We are able to obtain satisfactory assurances about the membership of the partnership.
  • The number and type of partners is not such as to cause concern in the first place - for example, a small and fixed number of participators, such as corporations engaged in a joint venture; or again where the concern is the business arm of a small number of joint intellectual property owners such as a band or similar collaborative venture.

Where you conclude that relief at source cannot be authorised, the partnership will only be able to obtain treaty benefits on behalf of its members by making a series of repayment claims and by providing supporting evidence about the identity of its partners with each claim.

Cases of doubt or difficulty should be referred to Specialist Personal Tax, PT International Advisory.