UK Parliament Considers Amendments To Double Taxation Regime

Mandy Robinson, Tax-news.com, London

28 March 2001

The UK government has published details of its changes to the double taxation avoidance regime as announced by the Chancellor in his budget speech three weeks ago, as well as a revised draft Regulatory Impact Assessment (RIA) allowing for changes to the double taxation regime laid out in both the Finance Act 2000 and Finance Bill 2001.

Broadly speaking, the new rules allow onshore pooling of foreign dividend streams that is comparable to the offshore 'mixing' that was prevalent until last year. The Inland Revenue states: 'The proposals announced in Budget 2001 will mean that the Finance Act 2000 provisions operate in the way in which they were intended to work. They will significantly benefit UK groups who acquire or already have existing business structures where tax in excess of 30% is paid at several levels in that structure, or tax at rates both below and above 30% are paid at different levels.'

The text of the regulations (for SI 1163 The Double Taxation Relief (Surrender of Relievable Tax Within a Group) Regulations 2001) is available at http://www.inlandrevenue.gov.uk/si/2001-1163.pdf and (for SI 1156 The Double Taxation Relief (Taxes on Income)(Underlying Tax on Dividends and Dual Resident Companies) Regulations 2001) at http://www.inlandrevenue.gov.uk/si/2001-1156.pdf.

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