HMRC launched a Double Taxation Treaty Passport (DTTP) Scheme for overseas corporate lenders at a meeting held in London on 1 April 2010. As part of that scheme, HMRC launched a new form last month to enable UK corporate borrowers to inform them about a loan from a Double Taxation Treaty Passport Holder.

Here is a quick recap on the basics of how the scheme works. Readers should be aware that the scheme is for overseas corporate lenders only. Individuals are not eligible.

• An overseas corporate lender in a country with which the UK has a double taxation treaty that includes an interest or income from a debt-claims Article, may apply for a ‘Treaty Passport’ from HMRC.
• If a Treaty Passport is granted by HMRC, the passport holder is entered onto the publicly available register with a unique DTTP number. Follow the link below to view this register on the HMRC website.
• Prospective UK resident corporate borrowers should check HMRC's online register (Register of Double Taxation Passport holders) to verify the lender's Treaty Passport holder status.
• If the UK borrower enters into a loan agreement with a lender who is registered as a Treaty Passport holder, the lender will notify them of their passport holder status and reference number.
• The UK borrower should then notify HMRC within 30 days of the ‘passported’ loan. The notification should be made using form DTTP2. Form DTTP2 can be completed and sent to HMRC online or it can be downloaded, filled in and returned to HMRC by post.
• HMRC will use the DTTP2 notification details to issue a ‘Direction’ to the UK borrower to pay the interest with Income Tax deducted at the rate set out in the relevant Double Taxation Treaty.
• For non-Treaty Passport situations, the normal ‘certified double taxation claim’ remains the default method for applying for Double Taxation Treaty Relief.

For more detailed information go to the HMRC website at http://www.hmrc.gov.uk/cnr/dttp-overview.pdf