HM Revenue & Customs (“HMRC”) has published details of the UK’s new Double Tax Treaty Passport Scheme (the “DTTP Scheme”), the aim of which is to simplify and speed up the process for granting double tax treaty relief on UK loan interest payments to non-UK corporate lenders.
Applications can now be made for passports under the scheme. A passport can then be used on loans made from September 1, 2010.
Outline of the DTTP Scheme
Set out below is a summary of some of the key aspects of the DTTP Scheme:
Further details can be found by visiting the HMRC Website or by clicking here.
Advantages of the DTTP Scheme
The DTTP Scheme should reduce the administrative time and cost incurred by non-UK lenders who regularly make loans to UK borrowers. Under the scheme, a passport holder would need only notify a borrower of its DTTP Scheme status and reference number, as opposed to completing and submitting a certified double tax treaty relief claim form for each UK loan it enters into.
The process should also give rise to far quicker treaty directions for UK borrowers in respect of passport holders, and therefore reduce gross-up risk under loan documentation.
This article was originally published by Bingham McCutchen LLP.