INTM162020 - UK residents with foreign income or gains: certificates of residence: information to be supplied with a request

As stated at INTM162010, before HMRC can certify residence for the purpose of claiming benefits under a Double Taxation Agreement (DTA) a customer will need to provide the information listed below. This applies to customers of all types and sizes and is also in addition to the information required in order to identify the customer when they make a request in accordance with INTM162160.

In certain limited circumstances, a customer may be able to agree with their Local Office, Customer Co-ordinator or Customer Compliance Manager that they may not need to provide all of the information listed below with every request.

However, individual customers will always have to provide the information referred to below as they should make a request via the on-line tool referred to at INTM162160. All other customers should also continue to provide the information referred to below unless agreement has been reached with their Local Office, Customer Co-ordinator or Customer Compliance Manager.

Where the other state produces a specific form on which a claim should be made, the customer should also provide a copy of that form (after completing the parts applicable to them) with their request. Details of those states which require claims to be made on specific forms can be found on the country specific pages of the Double Taxation Relief manual (DT2140PP), usually under the ‘relief from [name of territory] tax’ or ‘claims procedure’ section of those pages.

It should be noted that whilst HMRC tries to keep the DTR manual updated there will be occasions where it contains references to forms which are no longer used by the other state or where it does not mention forms which have been recently introduced. Customers should therefore check whether a claim has to be made on a specific form with the relevant overseas tax authorities before requesting a Certificate of Residence (CoR). Claim forms which appear over two pages should be printed on both sides of each piece of paper.

Note that HMRC will only be able to issue a CoR to a third party (such as an agent or other representative) if the principal customer has provided their consent for HMRC to do so. Such consent may be provided in the form of a 64-8 or in any other format. If the customer would like the CoR to be issued to a third party, a copy of the consent should therefore be sent with the request unless already provided.

The information HMRC will require with a request is as follows:

1 - An explanation as to why the person requires a CoR, including confirmation of which DTA they wish to make a claim under.

2 - Confirmation of the type of income in respect of which they wish to make a claim and the particular income article under which they wish to make a claim.

3 - Confirmation of the period for which the customer requires a CoR if not for the date on which the certificate is to be issued.

4 - If required by the specific DTA, confirmation as to whether the customer (for the whole of the period for which they require a CoR):

• is the beneficial owner of the income in respect of which they wish to make a claim,
• is subject to UK tax on all of the income in respect of which they wish to make a claim.

5 - For newly incorporated companies, who have yet to file a Corporation Tax self-assessment return, the name and residence of each director and shareholder and the reason for which the company believes it is a resident of the UK (bearing in mind the guidance at INTM120030).

6 - For individuals who require a CoR for periods on or after 6 April 2013 and who have yet to file a self-assessment tax return for the period required:

• the number of days spent in the UK during the tax year in which they require a certificate,
• if the individual has spent less than 183 days in the UK during the tax year in which they require a certificate, the basis on which they are believed to be resident under the Statutory Residence Test (SRT),
• the date on which the individual arrived in or departed the UK,
• if the individual arrived in or departed the UK during the tax year in which they require a CoR, confirmation of the date on which they began or ceased to be resident according to the SRT split year rules.

Further information in respect of each of these questions can be found below:

1 - If a customer requires HMRC to certify that they are a resident of the UK for any purpose other than claiming relief from foreign taxes under a DTA, they should ask for a ‘letter of confirmation’ in accordance with the guidance at INTM162140.

2 - Customers most commonly require a CoR in order to make claims for relief from tax on business profits, dividends, interest and royalties. The income articles applicable to these sources are usually Articles 7, 10, 11 and 12 respectively (where the DTA follows the OECD Model Convention), although the numbering may be different in some DTAs.

General descriptions of the Articles normally present in a DTA can be found at INTM153000, although customers should always check the particular DTA under which they intend to make a claim as the contents may vary from one to another.

If a customer has more than one source of income (falling under the same or different articles) they should consider the questions at 3 and 4 as above in respect of each source.

3 - Please note that a CoR cannot be issued for any future period as HMRC cannot certify that a customer will continue to be UK resident.

4(a) - Most DTAs state that if a person wishes to claim relief from tax in the source state in respect of income such as dividends, interest and royalties (but not business profits), that person has to be the beneficial owner of that income.

Customers should consider the guidance at INTM162080 before making a request for a CoR where this condition applies. If the customer is not the beneficial owner of the income, the other state may deny relief. In such cases, the customer should request or arrange for each of the actual beneficial owners to request a CoR in their own name (provided they are residents of the UK as well) so that relief can be granted.

4(b) - Some DTAs provide that a person must be subject to tax on income such as dividends, interest and royalties as well as or instead of being the beneficial owner. The meaning of subject to tax, and its distinction from liable to tax, can be found at INTM162090.

Note that, under CTA09/Part 9A, UK companies are usually exempt from tax on the great majority of dividends received (see INTM650000). If a UK company is exempt from tax on the dividends it receives, HMRC will not be able to issue a CoR where the DTA in question states that the dividends must be subject to UK tax.

UK companies can, however, elect (under CTA09/S931R(2)) for this exemption not to apply. If such an election is made, the dividends would be subject to UK tax and HMRC could issue a CoR. The company would then be able to claim relief from the foreign tax and if any foreign tax remains payable, credit for that tax may be available against the UK tax chargeable on the same income.

UK companies in this situation should therefore consider whether it is in their interest to make an election under S931R(2) (so that the dividends are charged to UK tax with relief being available for the foreign tax under the terms of the DTA) or not (so that the dividends are not subject to UK tax but with no relief being available under the DTA for the foreign tax suffered).

In any case where a company does require a CoR to claim relief from foreign taxes on dividends where the DTA provides that they must be subject to tax on those dividends, the company should provide a copy of the S931R(2) election with their request along with confirmation that the election has not been subsequently revoked.

5 - Where a company has yet to file a self-assessment tax return, it may not be possible to issue a CoR. This will be particularly so where the company is registered overseas and claims to be UK resident by virtue of being centrally managed and controlled in the UK (INTM120060). If a newly incorporated company does require HMRC to provide a CoR, it should provide as much information as possible to satisfy HMRC that it is UK resident. If HMRC is not satisfied that a company is UK resident, we may ask for further information and if still not satisfied, we may refuse to issue the CoR.

6 - For periods on or after 6 April 2013, an individual’s residence status for UK tax purposes will be determined by the SRT. In cases where an individual has yet to file a self-assessment tax return for the period in which the CoR is required, HMRC will require further information in order to satisfy us that they are resident for the period in question. In cases where the individual has just arrived in the UK, it may not be possible to issue a CoR until the individual has stayed in the UK for sufficient time to be able to demonstrate that they are indeed resident. Further information regarding the SRT can be found at RDR1.

It will only be not appropriate to answer the questions at 4(a) and 4(b) if the income article under which the customer wishes to make a claim does not include such a qualifying condition.

It should also be noted that the conditions referred to in 4(a) and 4(b) as above may not be the only conditions which have to be met for the claim to be accepted by the other state. All customers should therefore check the conditions of the particular income article under which they intend to make a claim before requesting a CoR.

Copies of most DTAs can be found on GOV.UK . If a copy is not available, a summary of the DTA can be found in the country specific pages at DT2140PP.