Corporate tax: requests for relief from double taxation

Who is likely to be affected

UK companies receiving overseas dividends for periods before the introduction of the distribution exemption in 2009.

General description of the measure

This measure limits access to Double Taxation Relief (DTR) in certain circumstances. Specifically, it will prevent new claims for double tax relief credit calculated at the foreign nominal tax rate which might otherwise arise in relation to foreign dividends received by UK companies in periods prior to the introduction of distribution exemption in 2009.

Political objective

This measure aims to preserve the balance between the right of taxpayers to file requests for relief from double taxation and the need to impose reasonable deadlines for such requests. It prevents certain new requests for relief from double taxation relating to previous accounting periods where these requests relate only to an amount of tax deemed to be calculated at the foreign nominal rate, following a decision by the Court of Justice of the European Union. It would not be fair to allow new claims for long-settled years where no actual additional tax was paid. Conversely, the measure is not intended to prevent such claims concerning open periods or still the subject of ongoing litigation.

Context of the measure

In a written ministerial statement dated July 20, 2022, the government announced that legislation would be introduced to limit certain claims for relief from double taxation.

Detailed proposal

Effective date

This measure will apply to claims occurring as of July 20, 2022.

Current law

The current law is contained in Section 79 of the Taxation (International and Other Provisions) Act 2010 (TIOPA) and Section 806(2) of the Income and Taxation Act 1988. corporations (ICTA), which set extended deadlines for certain double taxation. relief requests.

Proposed revisions

Proposed revisions

Legislation will be introduced in Appropriation Bill 2022-23 to restrict the ability to make requests for extended time under Section 79 TIOPA 2010 or Section 806(2) ICTA 1988.

No request for an extension of time may be made as of July 20, 2022 when the adjustment giving rise to a request for credit is an amount calculated by reference to a foreign nominal tax rate. Such claims may still be made where the adjustment to tax payable relates to an actual increase in foreign or UK tax, rather than an amount calculated by reference to a nominal foreign tax rate, where this adjustment has taken place over the past six years.

Requests for time extensions can also always be made in connection with accounting periods that are under appeal or investigation.

Summary of impacts

Treasury impact (£million)

2022 to 2023 2023 to 2024 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028
None None None None None None

This measure should have no impact on the Treasury.

This measure supports the Exchequer in its commitment to protect revenue.

Economic impact

This measure should not have significant economic impacts.

Impact on individuals, households and families

There is no impact on individuals since this measure only affects businesses.

Equalities impacts

It is not expected that there will be any impacts for groups sharing protected characteristics, as this measure will only apply to a limited number of large companies and will only act to restrict their ability to make requests relief from double taxation with respect to foreign dividends.

Impact on businesses, including civil society organizations

This measure is expected to have a negligible impact on businesses. This will limit the ability of approximately 1,000 large corporations and investment funds to make certain claims for relief from double taxation in respect of foreign dividends received during periods prior to the introduction of the distribution exemption in 2009. limited one-time costs could include familiarization with the new rules. . There should be no ongoing costs. The customer experience should remain broadly the same as it does not significantly change the way businesses interact with HMRC. This measure should not have an impact on civil society organizations

Operational impact (£million) (HMRC or other)

The implementation of this measure has no operational impact on HMRC.

Other impacts

Other impacts were taken into account and none were identified.

Monitoring and evaluation

The measure will be reviewed by contacting the taxpayer groups concerned.

Additional tips

If you have any questions about this change, email: [email protected]

Luisa D. Fuller