IHTM27183 - Double Taxation Relief: examination after grant when relief claimed

If a claim for a double taxation credit under IHTA84/S159 (1) has been provisionally allowed pre-grant, the taxpayer must be asked to produce evidence of payment of the foreign tax in the form of the assessment of foreign tax (or other document showing details of the property charged) and the official receipt before we can accept the relief is final.

If a claim for double taxation credit is made and we have a Double Taxation Convention with the country concerned, the particular provisions of the relevant Convention must be considered and the instructions at IHTM27167 applied.

When the taxpayer asks for double taxation relief after the grant has been obtained and tax paid,

• If relief is due under a DTC then you should consider the terms of that DTC and ask for the appropriate Certificate of tax paid.
• If unilateral relief is due, you should ask the taxpayer to produce evidence of payment of the foreign tax in the form of the assessment of foreign tax (or other document showing details of the property charged) and the official receipt.

You must not raise the question of giving an interim repayment of tax before such evidence has been produced. If necessary you may tell the parties that the collection of tax on the IRA is always provisional, but that once the tax has been paid it can only be repaid if it is “proved to the satisfaction of the Board” that there has been an overpayment (IHTA84/S241 (1)).

• If they provide evidence (as above) that tax has been paid, investigators in Compliance Group can allow the relief.
• Members of PC&S must refer the file to TSS for permission to allow the relief.

If, after being told what evidence is required before their claim for a foreign tax credit can be accepted, the taxpayer asks whether an interim repayment can be made before such evidence is available, they should be told, by letter, that we can consider giving an interim repayment only:

• When the Legal Personal Representatives are resident in the UK
• If they supply an estimate that specifies the individual items in respect of which foreign tax is considered to be payable. The claim must be supported by a corrective account signed by the (UK) liable persons.

and

• if they produce the official assessment of foreign tax

and

• on the clear understanding that the official receipt (or appropriate Double Taxation Convention certificate) for payment of the foreign tax as so assessed (or any amendment thereof) will be forwarded to this office in due course and that any further IHT which may then be found to be payable is duly paid.

Before making any such provisional repayment, you should verify the situs of the property concerned and check the estimated amount of the foreign tax to try and ensure that the figure claimed is not excessive. In any event you should make it clear that (as the case may be) the appropriate Double Taxation Convention certificate, or the official assessment of the foreign tax as well as the receipt for its payment, will be required before the provisional credit allowed can be agreed.

If there is any doubt that there may be a difficulty collecting the correct amount of tax (for example because none of the liable people live in the UK) refer the papers to DMB