Aozora GMAC Investments v HMRC

In Aozora GMAC Investments v HMRC [2021] UKFTT 99 (TC) (12 April 2021) the FTT allowed unilateral credit for US withholding tax when treaty relief did not apply.

The taxpayer Aozora UK received interest payments net of withholding tax from its US subsidiary. The US tax authority denied Aozora UK’s application to access the benefit of the UK-US double tax treaty (DTT) on the grounds that Aozora UK was not a qualified person within the meaning of article 23 on the limitation on benefits.

Therefore Aozora UK claimed unilateral relief (for the US withholding tax) by way of credit against the UK tax due on the interest it received. HMRC refused the claim arguing that ICTA 1988 s 793A(3) (now TIOPA 2010 s 11(3)) prevented unilateral relief here. Section 793A(3) prevents UK domestic law from giving unilateral relief for overseas withholding tax where the...

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