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HMRC internal manual

International Manual

DT applications and claims: FOTRA securities

FOTRA and DT claims

A person entitled to exemption from UK income tax on interest payments from a FOTRA security may claim repayment of some or all of the tax deducted under the terms of an interest article in a DTA. You should treat any such claim as a claim under the interest article. It follows that the claimant must satisfy the conditions of the DTA rather than the conditions for FOTRA exemption. In effect the payment loses the label of FOTRA and is treated in the same way as any other interest payment.

In practical terms it makes no difference if the claimant is entitled to full relief under the DTA. However the person who received the FOTRA interest may be able to claim repayment of the tax deducted by meeting the requirements of the DTA without meeting the beneficial ownership condition for FOTRA exemption.

If the claimant is only entitled to partial repayment of the tax deducted under the DTA he will probably receive credit for the UK tax retained against his liability to tax on the interest in his country of residence. You should therefore make the payment as claimed because to increase the payment may cause the claimant inconvenience when settling his liability to tax in the country of residence. You could explain to the claimant that full repayment would be available if he made a claim on form A1.