help - mutual agreement

[tiengodue]

Hello I put a claim in with a foreign tax authority that tax should not be deducted at source on my foreign pension and that I should pay tax in the UK
under tne terms of the relevant DTA. However the foreign authority is disputing this. I would like therefore to request that the two tax authorities mutually agree the way forward so that I am not taxed twice. I believe this is my right under the terms of the DTA, namely to invoke the mutual agreement procedure.

Therefore my question is, can I request that HMRC put aside the tax due to them until they have agreed matters with the foreign authority?
I am a pensioner and really cannot afford my pension being taxed twice.

[darthblingbling]

What's the country of source for the pension?

[bd6759]

If HMRC have assessed you, or amended your tax return, you have the right of appeal. If you have appealed you can ask for the tax to be postponed.

[maths]

The resolution of double tax disputes is not particularly straight forward.

If under the relevant DTA it is provided that wrt pension income the source country has no right to levy its tax then. if it has the UK will not give a tax credit against any UK tax charge under the DTA ands most likely will not grant unilateral relief.

You may not reference to which country is involved.

May I suggest you let us know and someone can then take a look to see if, with respect, your interpretation is correct. This could save a lot of time and effort on your part.

[tiengodue]

The resolution of double tax disputes is not particularly straight forward.

If under the relevant DTA it is provided that wrt pension income the source country has no right to levy its tax then. if it has the UK will not give a tax credit against any UK tax charge under the DTA ands most likely will not grant unilateral relief.

You may not reference to which country is involved.

May I suggest you let us know and someone can then take a look to see if, with respect, your interpretation is correct. This could save a lot of time and effort on your part.

hi the rekevant dta is between the uk and italy.
i am not asking the uk to grant relief but just to delay the tax due until they settle with the foreign authority under the mutual agreement procedure.

[maths]

I agree that a non-Government pension from Italy if you are a UK resident recipient is not liable for tax in Italy under the DTA.

If the Italians do seek to tax (possibly by way of a withholding tax) then you are required to file whatever are the appropriate forms in Italy in order to claim relief under the DTA. The onus is on you.

As far as the UK tax authorities are concerned they will levy UK tax and even if a withholding has been levied in Italy the UK will not grant any offsetting tax credit.

Thus, I can see no reason for the UK granting any deferral of any UK tax charge. This will not change whether or not the Italians levy and/or refund their tax charge.

There is also nothing to appeal against here in the UK under any UK domestic provisions.

However, if the Italians are being difficult and assuming you have followed the correct procedures in Italy then under the DTA's Mutual Agreement Article (MAA) you can ask the UK to get involved to resolve the matter. However, the theory is very different from the practice. Also in the DTA with Italy under the MAA there is no requirement for a solution to be found; all that is required of HMRC is their "best endeavours".

[tiengodue]

I agree that a non-Government pension from Italy if you are a UK resident recipient is not liable for tax in Italy under the DTA.

If the Italians do seek to tax (possibly by way of a withholding tax) then you are required to file whatever are the appropriate forms in Italy in order to claim relief under the DTA. The onus is on you.

As far as the UK tax authorities are concerned they will levy UK tax and even if a withholding has been levied in Italy the UK will not grant any offsetting tax credit.

Thus, I can see no reason for the UK granting any deferral of any UK tax charge. This will not change whether or not the Italians levy and/or refund their tax charge.

There is also nothing to appeal against here in the UK under any UK domestic provisions.

However, if the Italians are being difficult and assuming you have followed the correct procedures in Italy then under the DTA's Mutual Agreement Article (MAA) you can ask the UK to get involved to resolve the matter. However, the theory is very different from the practice. Also in the DTA with Italy under the MAA there is no requirement for a solution to be found; all that is required of HMRC is their "best endeavours".

the issue is one of tax residence. the italians class me as tax resident there due to property and bank account.
but i am also resident in the uk due to time spent here.

[maths]

I had assumed from your post the issue was one of w/tax in Italy. However, the issue I see is one of dual residence.

In such cases you need to go through the tests contained in Article 4(2) of the UK/Italy DTA to yourself determine in which of the two countries your dual status is resolved.

Assuming resolution in favour of the UK (as you suggest) then the UK has primary rights to tax; I see no reason (as posted earlier) in such a case that the UK will defer their tax charges.

If resolution of dual residence was in favour of Italy you would complete Form HS 302 and lodge withe HMRC seeking relief from UK tax (either total or partial).
Presumably there may be a similar form produced by the Italian tax authorities for you to complete and lodge with them. Until you have gone through this procedure or whatever is necessary in Italy under their domestic law the Mutual Agreement procedure can't be invoked.