DT1836 - Non-residents: UK income: : Interest, royalties payable
Interest, royalties, maintenance or other annual payments may be payable under an agreement providing for payment of a specified sum `free of tax’ or without (or after) deduction of United Kingdom tax but without mentioning the basic or lower rate. See RE1230 regarding maintenance agreements in such terms for years 1989-90 and later.
a)
i) If the double taxation agreement provides for exemption from United Kingdom tax, the gross payment is the actual amount paid, that is there is no distinction between gross and net payment.
ii) If the double taxation agreement provides for United Kingdom tax at a reduced rate, the gross payment is the actual payment grossed up at the specified reduced rate.
b) An agreement containing such `free of tax’ provisions does not entitle the recipient of the payment to any repayment under the double taxation agreement of United Kingdom tax paid by the payer in respect of the payment as he is only entitled, under the agreement, to the sum specified.
c) The payer cannot give a valid certificate of the payment of a gross sum which, after deduction of tax at the basic or lower rate, leaves the sum actually paid.