788 Relief by agreement with other [F1territories].U.K.
M1(1)If Her Majesty by Order in Council declares that arrangements specified in the Order have been [F2made in relation to any territory] outside the United Kingdom with a view to affording relief from double taxation in relation to—
(a)income tax,
(b)corporation tax in respect of income or chargeable gains, and
(c)any taxes of a similar character to those taxes imposed by the laws of that territory,
and that it is expedient that those arrangements should have effect, then those arrangements shall have effect in accordance with subsection (3) below.
(2)Without prejudice to the generality of subsection (1) above, if it appears to Her Majesty to be appropriate, the arrangements specified in an Order in Council under this section may include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of the territory to which the arrangements relate concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and where arrangements do include any such provisions, the declaration in the Order in Council shall state that fact.
(3)Subject to the provisions of this Part, the arrangements shall, notwithstanding anything in any enactment, have effect in relation to income tax and corporation tax in so far as they provide—
(a)for relief from income tax, or from corporation tax in respect of income or chargeable gains; or
(b)for charging the income arising from sources, or chargeable gains accruing on the disposal of assets, in the United Kingdom to persons not resident in the United Kingdom; or
(c)for determining the income or chargeable gains to be attributed—
(i)to persons not resident in the United Kingdom and their agencies, branches or establishments in the United Kingdom; or
(ii)to persons resident in the United Kingdom who have special relationships with persons not so resident; or
(d)for conferring on persons not resident in the United Kingdom the right to a tax credit under section 231 in respect of qualifying distributions made to them by companies which are so resident.
(4)The provisions of Chapter II of this Part shall apply where arrangements which have effect by virtue of this section provide that tax payable under the laws of the territory concerned shall be allowed as a credit against tax payable in the United Kingdom.
(5)For the purposes of this section and, subject to section 795(3), Chapter II of this Part in its application to relief under this section, any amount of tax which would have been payable under the law of a territory outside the United Kingdom but for a relief to which this subsection applies given under the law of that territory shall be treated as having been payable; and references in this section and that Chapter to double taxation, to tax payable or chargeable, or to tax not chargeable directly or by deduction shall be construed accordingly.
This subsection applies—
to any relief given with a view to promoting industrial, commercial, scientific, educational or other development in a territory outside the United Kingdom, being a relief with respect to which provision is made in the arrangements in question for double taxation relief; F3. . .
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F4Relief does not fall to be given in accordance with section 801 by virtue of this subsection unless the arrangements in question make express provision for such relief (but this paragraph is without prejudice to section 790(10B)).]
(6)Except in the case of a claim for an allowance by way of credit in accordance with Chapter II of this Part, a claim for relief under subsection (3)(a) above shall be made to the Board.
(7)Where—
(a)under any arrangements which have effect by virtue of this section, relief may be given, either in the United Kingdom or in the territory [F5in relation to] which the arrangements are made, in respect of any income or chargeable gains, and
(b)it appears that the assessment to income tax or corporation tax made in respect of the income or chargeable gains is not made in respect of the full amount thereof, or is incorrect having regard to the credit, if any, which falls to be given under the arrangements,
any such assessments may be made as are necessary to ensure that the total amount of the income or chargeable gains is assessed, and the proper credit, if any, is given in respect thereof, and, where the income is, or the chargeable gains are, entrusted to any person in the United Kingdom for payment, any such assessment may be made on the recipient of the income or gains, and, in the case of an assessment in respect of income, may be assessed under Case VI of Schedule D.
(8)Any arrangements to which effect is given under this section may include provision for relief from tax for periods before the passing of this Act, or before the making of the arrangements, and provisions as to income or chargeable gains which is or are not subject to double taxation, and the preceding provisions of this section shall have effect accordingly.
(9)Any Order in Council made under this section revoking an earlier such Order in Council may contain such transitional provisions as appear to Her Majesty to be necessary or expedient.
(10)Before any Order in Council proposed to be made under this section is submitted to Her Majesty in Council, a draft of the Order shall be laid before the House of Commons, and the Order shall not be so submitted unless an Address is presented to Her Majesty by that House praying that the Order be made.
Textual Amendments
F1Word in s. 788 sidenote substituted (with effect in accordance with s. 88(3) of the amending Act) by Finance Act 2002 (c. 23), s. 88(2)(b)
F2Words in s. 788(1) substituted (with effect in accordance with s. 88(3) of the amending Act) by Finance Act 2002 (c. 23), s. 88(1)
F3Words in s. 788(5) repealed (1.4.2000) by Finance Act 2000 (c. 17), Sch. 30 para. 1, Sch. 40 Pt. 2(13), Note
F4Words in s. 788(5) inserted (with effect in accordance with Sch. 30 para. 2(2) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 2(1)
F5Words in s. 788(7)(a) substituted (with effect in accordance with s. 88(3) of the amending Act) by Finance Act 2002 (c. 23), s. 88(2)(a)
Modifications etc. (not altering text)
C1 See—1970 ss.267, 273, 273Aand 276(groups)—disapplication of those provisions in the case of companies treated as resident outside the U.K. by virtue of s.788.1989 s.115—calculation of tax credit for non-resident on gross amount of distribution.1990 s.32(8)—application of s.788to assets held by employee share ownership trusts.
S. 788 modified (27.7.1993) by 1993 c. 34, s. 194(1)
C2S. 788 restricted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 57
Marginal Citations
M1Source—1970 s.497(1)-(8); 1972 ss.98(2), 100(1); 1976 s.50(2); 1987 s.70(1)