Double taxation relief: time limit for claims
Published 15 March 2023
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Who is likely to be affected
UK companies in receipt of overseas dividends for periods prior to the introduction of distribution exemption in 2009.
General description of the measure
This measure limits access to double taxation relief (DTR) in certain circumstances. Specifically, it will prevent new claims for DTR credit calculated at the foreign nominal rate of tax which could otherwise arise in relation to overseas dividends received by UK companies in periods prior to the introduction of distribution exemption in 2009.
Policy objective
This measure is intended to preserve the balance between taxpayers’ rights to make double taxation relief claims and the need to impose reasonable time limits in respect of such claims. It prevents certain new claims for double taxation relief in relation to prior accounting periods where those claims only relate to a deemed amount of tax calculated at the foreign nominal rate, following a decision of the CJEU. It would not be fair to allow new claims for long-settled years where there has been no actual additional tax paid. Conversely, the measure does not seek to prevent such claims in relation to periods which are open or remain subject to ongoing litigation.
Background to the measure
In a Written Ministerial Statement on 20 July 2022, the government announced that legislation will be introduced to restrict certain claims for double taxation relief.
Detailed proposal
Operative date
This measure has effect for claims arising on or after 20 July 2022.
Current law
The current law is contained in section 79 of the Taxation (International and Other Provisions) Act (TIOPA) 2010 and section 806(2) of the Income and Corporation Taxes Act (ICTA) 1988, which set out extended time limits for certain double taxation relief claims.
Proposed revisions
Legislation will be introduced in Spring Finance Bill 2023 to restrict the ability to make extended time limit claims under section 79 TIOPA 2010 or section 806(2) of ICTA 1988.
No such extended time limit claims can be made on or after 20 July 2022 where the adjustment giving rise to a claim for credit is an amount calculated by reference to a foreign nominal rate of tax.
Such claims can still be made where the adjustment in tax payable relates to an actual increase in foreign or UK tax, rather than an amount calculated by reference to a foreign nominal rate of tax, where that adjustment occurred within the last six years.
Extended time limit claims can also still be made in relation to accounting periods that are under appeal or enquiry.
Summary of impacts
Exchequer impact (£m)
| 2022 to 2023 | 2022 to 2023 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| nil | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure only affects businesses.
Equalities impacts
It is not expected that there will be adverse effects on any group sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses. It will restrict the ability of approximately 1000 large companies and investment funds to make certain DTR claims in respect of overseas dividends received in periods prior to the introduction of distribution exemption in 2009. Limited one-off costs could include familiarisation with the new rules. There are not expected to be any continuing costs. Customer experience is expected to remain broadly the same as it does not significantly alter how businesses interact with HMRC. This measure is not expected to impact on civil society organisations.
Operational impact (£m) (HMRC or other)
There are no operational impacts to HMRC of implementing this measure.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please email: dtr.mailbox@hmrc.gov.uk.