INTM338590 - DT applications and claims - Provisional Treaty Relief Scheme for Interest

Syndicated Loans: Application procedures continued

Existing Loans

A syndicate manager can apply to bring an existing loan into the Provisional Treaty Relief Scheme (see para 11 of the Guidance Notes about changes to loans already in the Provisional Treaty Relief Scheme). Syndicate Managers are allowed to bring a new loan into the Scheme only if there is a new overseas member of the syndicate who is able to claim treaty benefits; all of the members are corporations and there are no unresolved problems with the “old” members of the Syndicate.

The Syndicate manager completes an application on form PTR-SM1A. This form asks for the same information requested by form PTR-SM1 and also for a list of the Centre for Non-Residents references under which treaty relief has already been given.

The new lending member of the syndicate need not submit a formal certified Double Taxation relief application. The application on form PTR-SM1A stands alone. A letter of acceptance into the Scheme on form PTR-SM2A can be sent to the syndicate manager.

Normal enquiries should be made of the tax office and HM Revenue and Customs as appropriate. If the application is successful a formal SI 1970 No 488 Direction can be issued to the UK borrower with a copy to the syndicate manager. The existing SI Directions are then cancelled. Subsequent changes to the syndicate are then dealt with in accordance with para 11 of the Guidance Notes.

Changes to Lending Members of a Syndicate

Syndicate members may sell their interest in a loan within the Provisional Treaty Relief Scheme. This is called “secondary trading”. We do not expect to be told of every change to the membership of a syndicate. We do not want to know if, for instance, one United States corporation sells its interest in a loan to another United States corporation because this should not affect the overall amount of relief available under the UK/USA treaty. Syndicate Managers need only let us know where the transfer affects the rate of treaty relief available - say a United States bank sells its interest to a Japanese bank (10% tax rate applies) or to a UK bank or to someone not entitled to treaty benefits. If we are satisfied that the syndicate members continue to qualify for treaty benefits an amended SI notice can be issued.

An examples of a change which might lead us to make further enquiries of the Syndicate Manager is if a lending member claims to be a sovereign immune entity (say “The National Bank of ….”). In any case where “sovereign immunity” is claimed you should refer the case to Technical Advice Group for advice.

It is possible that some syndicate managers will want the comfort of not making decisions and will tell us about all changes of membership. If this happens please refer the case to Technical Advice Group.

Revised Direction under SI1970/488

From January 2003 the Guidance Notes give an assurance that, providing we are notified “timeously” of changes to the lending members, we will issue a revised Direction that is effective from the date of the change. If you have any concerns that the syndicate manager has not told us of the change within a reasonable time, please refer to Technical Advice Group.