Before we give up our rights to tax property in accordance with
Article 5(1) of the DTC with the USA, we require the US authorities
to certify that disclosure has been made to them and that payment
of any appropriate tax has been made or will be enforced. This is
because Article 5(5) of the DTC withdraws this restriction and
allows us to tax the property if the USA is unable to enforce its
right to tax. Conversely, we also need to certify to the above if
the US authorities must give up their right to tax property.
Cases in which paragraph (1) operates to exclude some UK
property from the charge to IHT and which are, or but for that
exclusion would be, taxpaying should not be closed until the US
authorities have certified on Form 742 that disclosure has been
made to them and that payment of any appropriate tax has been made
or will be enforced.
This requirement should be explained to the taxpayer and 2
prints of Form 742 issued to them. Attention should be directed to
the appropriate paragraphs of the form, which the taxpayer is
required to complete. In particular where by reason of the
Convention the UK is giving up its taxing rights, only paragraph 1
is in point, and paragraphs 2 to 7 are not appropriate. On receipt
of a correct and duly certified form the case may be closed: any
error or difficulty should be referred to TG.
Where the USA gives up the right to tax property under
Article 5(1), US form 706 CE will be forwarded to this Office in
duplicate for certification.
After checking (it is important that the forms themselves
should not be marked in any way they and the file should be sent
with a note of any error or omission to TG for the issue of the
appropriate certificate.
