Where under the authority of a notice issued by FICO (International), a payment of interest, royalties, maintenance payments or other annual payments other than a payment made by a company within the charge to Corporation Tax (see DT1825) or a payment to which ICTA88/S125 applies (see IM4865) is made to a non-resident without deduction of tax, or under deduction of tax at a reduced rate, relief is given to the payer as follows
a) Interest Flowchart
b) Royalties, maintenance and other annual payments Flowchart
Any allowance or relief to be given may be given by discharge or
repayment, and, if the taxpayer so desires, collection of an
appropriate amount of tax may be held over until the required
information is available (see DT1880 onwards).
In cases within (b)
i) the computation for United Kingdom tax purposes of the
profits of the payer of the income is not affected by the authority
to pay the income without deduction of tax or under deduction of
tax at a reduced rate;
ii) instructions regarding the effect of the authority on
carry-forward of losses are contained in IM3554.
Where a payment to which ICTA88/S348, ICTA88/S350 would normally
apply is made without deduction of tax, or under deduction of tax
at a rate less than the domestic law rate, and it appears that
exemption or partial relief may be due under an agreement, but the
district does not hold a copy of an authority to cover the payment
(or, in a `free of tax' case, a report under DT1837 or 1838),the
facts should be reported to FICO (International), Nottingham.
Pending their reply no relief should be allowed to the payer and no
assessment (unless a time limit is running out) made under Sections
348 or 350.
As regards payments of interest or royalties made under `free
of tax' agreements, see DT1836 - DT1840.
