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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: Claims by financial concerns under Business Profits Article: How to deal with claims from foreign financial concerns

If you receive a claim or correspondence for income which can be considered under the Business Profits Article as outlined in INTM337310 you should deal with it as follows:

Where there is no interest article in the relevant Double Taxation Agreement (DTA) and the claimant is not trading in the UK through a permanent establishment, exemption may be authorised under the business profits article on form 241(Int-Roys).

Where in such circumstances the claimant is trading in the UK through a permanent establishment, necessitating restriction of relief under that article, and in cases where there is an interest article but claims under it are automatically restricted because the claimant is trading in the UK through a permanent establishment, you will need to consult the Officer dealing with the permanent establishment and arrange for any interest attributable to the permanent establishment to be included in his computation of liability. Form 502 should be used for this purpose. Provided the Officer has no objections the interest can then be exempted under the business profits article using form 241(Int-Roys). You should issue form 501 (amended as necessary) with the Officer’s copy of the exemption notice where relief is authorised under the business profits article and there is trading in the UK through a permanent establishment. Where there is no trading through a permanent establishment you need to send a memo with the exemption notice explaining the circumstances in which relief has been authorised.

Note: These provisions do not apply where the rate of relief under the business profits article is more favourable than under the interest article and relief is available under the latter.