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HMRC internal manual

International Manual

DT applications and claims - Provisional Treaty Relief Scheme for Interest


Following a lengthy consultation period the Provisional Treaty Relief Scheme (PTRS) came into effect from 1 September 1999. See Tax Bulletin 41C published in June 1999. Following further discussions with the UK loan industry, changes were made to the Scheme and the PTRS Guidance Notes effective from January 2003.

The PTRS Guidelines are available on the National Archives website

There are two completely separate elements to the Scheme

  • “Syndicated loans”, where a group of lenders are brought together to lend money to fund a project.
  • “One to One” loans, where a UK company borrows money from just one overseas lender.

The Scheme applies only to UK corporate borrowers.

All of the lenders must also be companies. Partnerships, Limited Liability Companies, individuals, trusts etc are not eligible to have payments made to them covered by the PTRS. But the fact that the lending membership of a syndicate may include a non-corporate concern need not of itself prevent us from allowing the syndicate into the PTRS - see Part 6 of the Guidance Notes. 

The PTRS allows the CAR Residency to issue a letter of acceptance into the Scheme to a UK borrower in the case of a One to One loan, or to a Syndicate Manager for production to a UK borrower in the case of Syndicated Loans. The letter of acceptance allows interest to be paid either tax-free, or at reduced DT treaty rates of withholding tax pending the issue of a formal Direction by us.

A notification of acceptance into the Scheme does not remove the need to issue a formal Direction under the terms of SI1970/488, as it is this legislation which is our legal authority to relieve UK payers of their obligation under UK tax law to deduct tax in full.

In the case of “One to One” loans there remains the requirement for an overseas lender to make a formal application under the terms of the relevant double taxation treaty, in the normal way, and they are given a period of grace of 3 months from the date we accept them into the PTRS to ensure that we get such a certified application form.

But where a Syndicated Loan is accepted into the Scheme there is no requirement for separate formal claims to be made by the syndicate members.