ICTA88/S788 provides that domestic law is subject to treaty
arrangements. The interpretation of treaties depends not just on
their words, but on the intentions of the signatories. This means
that the guidance reflected in the OECD’s Commentary on the
Model Convention has great significance. The Revenue view was and
is that there is no fundamental inconsistency between the
corporation tax charging provisions and tax treaties – see
GIM10122. The FA03 changes, however,
make more explicit the application in UK law of the arm’s
length principle as reflected in Article 7 of the OECD Model.
The effect of a treaty may be to curtail UK taxing rights as
set out, for example, at ICTA88/S11, but it does not found a charge
where there is none in domestic legislation. In practice, the
consistency principle means that the Article 7 approach is in
general considered to apply even when there is no treaty, as
reflected in UK law. Some treaties may provide for specific
treatments of insurance business, notably those with Australia,
Barbados, Belgium, France, Ireland (life only), Jamaica, Kenya, New
Zealand and South Africa (life only). The International Manual
(INTM151000 and INTM161000+) gives more guidance on double taxation
treaties.
