»Ê¹ÚÌåÓýapp

FA15/S100(4D) provides a further relaxation of the general rule at FA15/S100(2A). This rule provides that credit is allowed against a company’s liability to DPT to the extent that a royalty payment included in the DPT liability under FA15/S88(5)(b) is:

• paid to a country or territory outside the UK,
• would not have been liable to UK income tax under a double taxation agreement or by virtue of ITTOIA05/S758 (see INTM367040) had the notional permanent establishment been an actual permanent establishment.

»Ê¹ÚÌåÓýapp effect of this rule is to remove from the scope of DPT any payments that would not ordinarily result in a UK liability.

However, this is subject to FA16/S42(7). If the arrangements were put in place to secure a tax advantage by virtue of a foreign double taxation agreement and that advantage is contrary to the purpose of that DTA, then the arrangements are DTA tax avoidance arrangements for the purpose of ITTOIA05/S917A (see INTM630200). »Ê¹ÚÌåÓýapp effect of this rule is to deny benefits under the UK DTA with the country to which the royalty payment is made. Where such a royalty payment is within the charge to DPT then no credit is given under FA15/S100(4D). This is illustrated in INTM630560.