Entitlement to relief for US withholding tax

The taxpayer a wholly owned subsidiary of Aozora Bank Ltd and incorporated in the UK received interest payments net of withholding tax from its US subsidiary. The US Internal Revenue Service did not accept its application to access benefits of the UK-US double tax treaty on the ground that Aozora UK was not a qualified person within the meaning of Article 23 of the treaty.

HMRC later refused the taxpayer’s claim for unilateral relief by way of credit against the UK tax due on the interest it received on the basis that TA 1988 s 793A(3) (now TIOPA 2010 s 11(3)) applied.

The taxpayer appealed.

The First-tier Tribunal said the key to unlocking the construction of s 793A(3) was the use of the adjective ‘express’ to qualify ‘provision’. Its meaning was ‘definitely formulated definite explicit specifically designated or specially intended’.

So the...