TaxSource Total

Here you can access summary of the key current tax developments in Ireland, the UK and internationally as reported by Chartered Accountants Ireland

The report of key tax developments are displayed per year, per month, by Ireland, the UK or International and by report title

Residence

Double Taxation Guidance Notes

HMRC have updated information on how it applies the EU Directive on interest and royalty payments between associated companies of different Member States in its Double Taxation Guidance Notes.

As provided for at Article 1(12) of the EU Directive, the UK requires companies resident in other Member States to establish their entitlement to exemption from UK income tax. They may do this by making a claim to HMRC Residency. The claim must be certified by the tax authority of the EU Member State in which the claimant is resident.

Relief at source is available for UK-source interest payments in cases where HMRC Residency is able to issue an exemption notice under The Exemption from Tax For Certain Interest Payments Regulations 2004 – Statutory Instrument Number 2622 of 2004.

It is not possible to ask HMRC Residency for advance authority to pay royalties without deduction of tax. Claim form EU Interest & Royalties may be used only to claim repayment of tax deducted from UK-source royalty payments.

Full details on how to claim an exemption or refund is available at http://www.hmrc.gov.uk/cnr/dt-guide-note-11.htm.

Amendments to the Residence and Domicile Tax Rules

HMRC have added to the FAQ arising from the residency and domicile tax rules introduced in the Finance Act 2008. The March updates cover questions on Remittances, mixed funds, bank accounts, the £30,000 charge, offshore mortgages, nominated income and discretionary Trusts.

The published text of answers to questions from members of the public and practitioners are available at http://www.hmrc.gov.uk/cnr/res-dom-tax-amends.htm

Revenue & Customs Brief 17/09

In its latest Revenue & Customs Brief on Residency, Domicile and the Remittance Basis, HMRC have announced a number of operational changes to its information and guidance on this topic and how it will deal with taxpayers affected by Residence and Remittance compliance requirements. The operational changes incorporate the significant amendments to the residency and remittance rules introduced by Finance Act 2008.

The main HMRC guidance for residence, domicile and remittance basis issues has for many years been the IR20. This was updated last year to incorporate some changes introduced by Finance Act 2008. However, Guidance to replace the IR20 will be published soon and at the same time the IR20 will be withdrawn. HMRC will also be withdrawing any other guidance on residence and ordinary residence contained in other manuals, Statements of Practice and publications (for example R&CB 01/07, TB52, SP/A10, SP3/81, SP2/91, SP17/91). In the light of this any practices associated with the old guidance, whether in IR20 or elsewhere, will not apply from 6 April 2009, unless provided for in the new guidance.

The remaining guidance will be published shortly and will include:

  • A simple guide to residence, ordinary residence and domicile.
  • The ‘Residence, Domicile & the Remittance Basis’ guidance (HMRC6). This replaces the old IR20.
  • New guidance on the remittance basis rules. (This will form part of the new ‘Residence, Domicile and Remittances’ manual for HMRC staff.)
  • Some new guidance on domicile. (This will move to the Residence, Domicile and Remittances manual in due course.)
  • Some new guidance on non-resident trusts.
  • Some guidance on the application of the remittance basis to the Transfer of Assets legislation. (This will form part of the new ‘Transfer of Assets’ manual for HMRC staff.)
  • Updates to the Capital Gains Tax manual to reflect the changes to the remittance basis.
  • A new short guide for international students.
  • Revised guidance on letting property abroad.

Initial non-domicile claims – Form DOM 1

Initial non-domicile claims – Form DOM 1 are also to be discontinued in light of the publication of new guidance on domicile. Any DOM 1 forms received by HMRC by close of business 25 March 2009 will still be processed but any received after that date will be returned unexamined.

Individuals paying the £30,000 Remittance Basis Charge

In response to the fact that the rules for nominating income and gains upon which the £30,000 is paid, and for identifying what is taxed if those nominated income or gains are later remitted to the UK, can be complex HMRC has decided to centralise such tax payers’ tax affairs in one HMRC office from 2009-10. This will be the CAR Residency office in Castle Meadow, Nottingham.

For full details on all the operational changes please review the Briefing at Section 2.10.