Global menu

Our global pages

Close
Budget 2017: Finance Tax - DTTP scheme – reducing tax barriers to raising finance

Budget 2017: Finance Tax - DTTP scheme – reducing tax barriers to raising finance

  • United Kingdom
  • Tax planning and consultancy - Budget

08-03-2017

Commenting on taxation measures announced in today's Budget, Deepesh Upadhyay, principal associate at Eversheds Sutherland, says:

"Since its launch in 2010, HMRC’s Double Taxation Treaty Passport (DTTP) scheme has provided an effective and efficient route for UK corporate borrowers and foreign corporate lenders to obtain the benefit of double tax treaty relief in the UK. This has helped ensure that such borrowers are able to eliminate or reduce UK withholding tax (currently at a rate of 20%) on interest payable to foreign lenders under loans or bonds with minimal administration and quick turn-arounds of DTTP filings by HMRC. In turn, this has thereby reduced the risk of tax ‘gross-ups’ under loan or bond documents by UK corporate borrowers which would otherwise increase their cost of funding.

"The problem however has been that access to the DTTP scheme has been restricted to corporate UK borrowers and corporate foreign lenders.

"As part of Budget 2017 and further to HMRC’s consultation on DTTP scheme, the Government announced today that it will be simplifying and widening access to the DTTP scheme. In line with Eversheds Sutherland’s consultation response in August 2016, the Government has widened access to the DTTP scheme to also permit non-corporate UK borrowers and non-corporate foreign lenders to utilise this scheme. This will be welcomed by, in particular, the many UK partnership borrowers who have long perceived the DTTP scheme as something which they should have had access to.

"In our view, the DTTP scheme has had a positive impact on the UK’s debt markets, by helping to reduce the administrative barriers and costs faced by foreign lenders wishing to make loans into the UK or acquire such loans in the secondary debt markets. Further simplification and widening access to the DTTP scheme for both borrowers and lenders alike will help to reduce the tax barriers to raising finance in the UK. HMRC will be publishing new guidance and revised terms and conditions which affect the DTTP scheme on 6 April 2017.

"We welcome the Government’s announcement and will be considering the new guidance and revised terms and conditions to determine if Eversheds Sutherland’s consultation responses and recommendations relating to the other aspects of the DTTP scheme have been adopted."

Please view our dedicated Budget 2017 hub here. It will give you access to our watch list, our contributors and relevant articles and tweets.

Subscribe to get tax legal updates and briefings

Subscribe to get tax legal updates and briefings

For more information contact

< Go back

Print Friendly and PDF
Subscribe to e-briefings