Double Taxation Agreements: Guernsey: Income from a UK source paid to a resident of Guernsey - Industrial or commercial profits paragraph
Paragraph 3 provides for the relief from UK tax of ‘the industrial or commercial profits of a Guernsey enterprise’.
In practical terms, this means that we can allow relief on UK interest paid to a bona fide bank in Guernsey, since it can be held that interest represents part of the bank’s profits as defined by paragraph 3.
So if you get a claim from a bank in Guernsey you will need to;
- be certain that it is a recognised bank - the Banker’s Almanac will help you here, or HMRC staff can refer to theBanks List [Hyperlink internally is
- consider if you should have the loan agreement reviewed by the HMRC office which deals with the accounts of the UK borrower - see INTM342010
If these checks are satisfactory, you can allow full relief.
But if you receive a claim from a Guernsey enterprise in respect of any other category of income, please refer to CAR Technical Advice Group before taking any action.