INTM400100 - EU Interest and Royalties Directive

What happens if a claim is refused or an exemption notice cancelled

If the Board of HM Revenue & Customs considers that it has grounds for refusing to issue an exemption notice, the CAR Residency will write to the claimant company within three months of receipt of the claim, giving the reasons for the refusal.

If it appears to the Board that the necessary conditions for exemption are no longer met, or it appears that anti-avoidance rules (FA2004/S104) apply, CAR Residency may cancel the exemption notice by writing to both the paying company and the non-UK person who requested the issue of the exemption authority.

The beneficial owner of the interest or royalties may appeal to the Special Commissioners against a refusal to issue an exemption notice or the cancellation of an exemption notice. They must do so to the Board within 30 days of the date of notification of the refusal.

The grounds of the appeal are that the conditions of FA2004/S98 have been satisfied or that the anti-avoidance rules do not apply. If the Special Commissioners allow the appeal, they will, as appropriate, direct HM Revenue & Customs to issue the exemption notice within 14 days of their decision, or direct that any cancellation was ineffective.

The Special Commissioners’ decision is final. That decision of course only concerns the granting of the exemption notice, not the payer’s or the claimant’s tax affairs more widely.