UK and International Tax news
Certificates Of Residence
Sunday 19th January 2014
HMRC has recently issued updated guidance on how taxpayers can request certificates of residence and the information they need to provide.
Where the UK has a DTA with a foreign territory, a person who is a resident of the UK, within the meaning of the DTA, may be entitled to claim relief from certain taxes of that foreign territory, either by way of relief at source or refund of tax already paid, if certain criteria are met.
In order to assess whether a person is entitled to such relief, the overseas fiscal authority receiving the claim will usually require HMRC to certify that the person is a resident of the UK within the meaning of the DTA. Some fiscal authorities may also require HMRC to confirm that the person fulfils other conditions.
The certification of residence [CoR] may need to be made on a specific form produced by the overseas fiscal authority or in a general letter produced by HMRC.
On request, HMRC will provide persons with a CoR where, to the best of its knowledge, the person is a resident of the UK. However, as the purpose of a CoR is to support claims for benefits under a particular article of a DTA, being the article applicable to the relevant income source, HMRC may refuse to issue a CoR where it is clear that the person would not be entitled to those benefits. There may be cases where a resident of the UK will not be able to obtain a CoR because they do not fulfil the criteria of the particular article under which they intend to claim benefits.
The decision as to whether relief from foreign taxes can be granted is, ultimately, one to be made by the overseas fiscal authority. It is therefore anticipated that HMRC will issue a CoR in the majority of cases and that a request will only be refused if there is no doubt that customer would not be entitled to benefits.
If HMRC has reason to believe that a person will not be entitled to benefits, it may request further information from the person before deciding whether a CoR can be issued. In cases where it is not clear whether that person would be entitled to benefits, HMRC may decide to make a spontaneous exchange of information with the other state to help them come to an informed decision as to whether benefits can be granted.
HMRC point out that the provision of a CoR will not guarantee that a claim to benefits under the relevant DTA will be successful as it will be up to the overseas fiscal authority to determine whether that person fulfils all the relevant conditions and whether benefits can be granted. In any case where a person believes an overseas fiscal authority has denied it benefits which it should be entitled to, HMRC will consider engaging with those authorities on the persons behalf under the Mutual Agreement Procedure for the relevant DTA.
In deciding whether a CoR can be issued, HMRC will require the to provide a certain amount of information when making their request.
If you would like further information on the information HMRC will require, the checks it makes and the circumstances in which a request may be refused, please contact Keith Rushen on 0207 486 2378.
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