HMRC have announced that a new Double Taxation “Treaty Passport” (DTTP) scheme for overseas company lenders is to be launched from 1 September 2010.

The Scheme will operate as follows:

• An overseas corporate lender in a country with which the UK has a Double Tax (DT) Treaty that includes an interest or income from debt-claims Article may apply for a ‘Treaty Passport’ from HMRC.
• If a Treaty Passport is granted by HMRC, the passport holder will be entered into a publicly available register with a unique ‘DTTP’ number. The register will be made available online on the HMRC website.
• The online register can be consulted by a prospective UK resident corporate borrower 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 will notify HMRC within 30 days of the ‘Passported’ loan. Form DTTP2 for this purpose will be available from the start of the Scheme.
• HMRC will use the DTTP2 notification details to issue a Direction to the borrower to pay the interest with income tax deducted at the rate set out in the relevant DT treaty.
• For non-Treaty Passport situations, the normal ‘certified DT claim’ remains the default method for applying for DT treaty relief.
• The DTTP scheme is for overseas corporate lenders only. Individuals are not eligible.