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HMRC internal manual

Lloyd's Manual

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HM Revenue & Customs
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Double taxation relief: foreign tax paid by Lloyd's members: credit relief claimed by non-residents

Residents of the EEA

In the 1999 European Court of Justice case Compagnie de Saint-Gobain v Finanzamt Aachen- Innenstadt the Court decided that the German tax authorities could not deny a French resident company with a German branch double taxation relief in respect of the branch if relief would be allowed to a German resident.

It followed that all residents of the EEA would be entitled to claim double taxation relief either as a deduction or as a tax credit. The Revenue announced in March 2000 that the revised treatment could be given on a claim by any eligible EEA residents for any years which were in date at the time.

Finance Act 2000 changes

Finance Act 2000 introduced provisions which amended ICTA88/S794 (2)(bb) and apply to all accounting periods ending on or after 21 March 2000. They provide that tax credit relief is available to residents of any State trading through a branch or agency in the United Kingdom, although this may be over-ruled in some cases by specific provisions of the relevant Double Taxation Agreement. Subject to those specific provisions, relief can now be given to residents of any state as either a deduction or as a tax credit.

For individual Lloyd’s Names, this change affects the tax year 1999-2000 and all later years. For corporate members, the change affects accounting periods ending on or after 21 March 2000, but in practice most corporate members are resident in the UK for tax purposes, so this change should not be significant.

‘Own country’ restriction

For 1999-2000 onwards, relief can only be claimed for ‘own country’ tax by way of a deduction, not as tax credit relief. For example, a resident of France can only obtain relief for French tax by way of a deduction, not as tax credit relief. Similarly, a US resident member can only be given relief for US tax by way of a deduction.

Lloyd’s set out on the forms CTA1 an analysis of foreign tax by country, so that relief can be claimed correctly for ‘own country’ tax.