Provisional Treaty Relief scheme

The Provisional Treaty Relief Scheme was introduced in 1999, with the aim of streamlining procedures for applications for

• exemption from deduction of tax, or
• a reduced rate of deduction of tax

from interest paid to a recipient resident in a country which has a double tax agreement ('DTA') with the United Kingdom. The scheme is voluntary. It is limited to the following two types of loan, where there is only a negligible risk that an application for relief would fail

• one to one company loans where there is no shareholding relationship or common ownership between the parties involved, for example, where the lender is an overseas lending institution
• syndicated loans, where there is a syndicate manager.

A provisional application may be made to the Centre for Non-Residents ('CNR') by the borrower in the first case and by the syndicate manager in the second case. However, the acceptance of a loan into the scheme does not necessarily imply that treaty relief will automatically be due and has no bearing on the allowability of the interest paid for the purposes of the payer's corporation tax liability.

Provisional authorisation of payments is strictly conditional on CNR receiving and approving a normal treaty application within three months of the provisional authority.

Please consult Tax Bulletin TB41C and the Provisional Treaty Relief Scheme Booklet; the latter can be downloaded from