IEIM530200 - Spontaneous exchange of rulings: Examples

IEIM530200: Spontaneous exchange of rulings: Examples

Example 1

Facts

A UK company receives agreement from HMRC that it can pay its interest on a loan from a non-UK resident company at the treaty rate. It does not have to deduct tax at the basic rate on payment of the interest. The UK has a Double Taxation Agreement with the jurisdiction where the overseas company is resident which allows for exchange of information.

Analysis

As the interest is payable to a non-UK resident company at the treaty rate consideration should be given to exchanging the information spontaneously with the country of residence of the overseas company under the Double Taxation Agreement. The decision to exchange spontaneously should include whether the loan has been made in the normal course of business of the lender. If so, it is unlikely that the information will be of interest to the overseas tax administration, even though it would be foreseeably relevant.

Example 2

Facts

Ms B, UK taxpayer and sole trader, requests and receives a non-statutory clearance as she wishes to confirm the tax treatment of certain business transactions before she files her tax return.

The transactions result in a tax consequence for another jurisdiction. The transactions do not give rise to profit-shifting or base erosion concerns and are not one of the five types of rulings required to be exchanged under Action 5.

Analysis

Again this clearance is within the meaning of a ruling for Action 5 (IEIM540100), but is not on the list at IEIM541010, so is not covered by that obligation.