INTM620630 - Offshore Receipts in respect of Intangible Property (ORIP): Process and procedures: Treaty claims

If taxpayers (corporates and non-corporates) are chargeable under Chapter 2A but are entitled to relief from this charge under a double taxation treaty then, in accordance with s6 TIOPA10, they should make a treaty claim within the appropriate time limits. Claims should be made at the earliest possible opportunity, and HMRC will aim to provide a response within 30 days of receipt. If confirmation has been received that treaty relief is available such that no charge under Chapter 2A arises before the deadline to notify chargeability, it will not be necessary to make that notification.

Treaty relief will be acknowledged in writing to apply indefinitely, provided the arrangements have been accurately described in the application and continue without a material change. A new claim should be made where the underlying arrangements or the nature of the income changes in a way which is more than insignificant. For example, a routine acquisition of IP by an acquisitive group where that IP is immediately placed within the IP holding structures described in the original clearance is not likely to necessitate a further claim. Note that confirmation of treaty relief will not be provided in respect of planned or hypothetical structures.

The claim should be posted or emailed to the following addresses, with ORIP in the subject line:

HMRC
SO842
Barkley House, Floor 2
LB DT Treaty Team
Central Mail Unit
Newcastle
NE98 1ZZ

Email the LB Nottingham, DTT Team: dttteam.lbnottingham@hmrc.gov.uk {#} and copy to orip.technicalqueries@hmrc.gov.uk.

Depending on the facts and circumstances and the terms of the double taxation treaty, it is generally expected that such relief would be under the business profits article in the relevant double taxation treaty. However, it may be the case that other articles apply, for example the royalties or other income article. Note that Chapter 2A will not apply where Chapter 2 Part 5 ITTOIA05 applies to a payment.

Example 1

D Ltd is a Jersey resident company within the charge to Chapter 2A. It holds IP and is part of a multinational online dating group, FINDLOVE.com.

The group makes UK sales via two UK companies, A Ltd, and B Ltd, and a French resident company, C SA. C SA pays royalties to D Ltd. A and B Ltd pay the IP holder a proportion of turnover for use of IP and services provided, in accordance with inter-company agreements.

Jersey is not a full treaty territory for the purposes of Chapter 2A because the relevant double taxation agreement (DTA), the UK-Jersey DTA does not contain a relevant non-discrimination provision. As such, there could be a charge under Chapter 2A on UK-derived amounts arising. However, treaty relief may be available for some or all of the charge on UK derived amounts.

D Ltd claims, and is granted, the following treaty relief:

The charge under Chapter 2A is reduced to nil in respect of amounts within Article 7 (Business profits) on the UK-derived amounts arising to D Ltd as a result of the payments made by A Ltd, B Ltd and C SA. HMRC ORIP CCG compliance team issue confirmation of this relief.

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