Making Dispute Resolution More Effective MAP Peer Review Report, United Kingdom (Stage 1)

Transcription

1 ECD/G20 Base Eroson and Proft Shftng Project Makng Dspute Resoluton More Effectve MAP Peer Revew Report, Unted Kngdom (Stage 1) InclUSIve FRAMEwRK on BEPS: ActIn 14

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3 ECD/G20 Base Eroson and Proft Shftng Project Makng Dspute Resoluton More Effectve MAP Peer Revew Report, Unted Kngdom (Stage 1) ICLUSIVE FRAMEWRK BEPS: ACTI 14

4 Ths document, as well as any data and any map ncluded heren, are wthout prejudce to the status of or soveregnty over any terrtory, to the delmtaton of nternatonal fronters and boundares and to the name of any terrtory, cty or area. Please cte ths publcaton as: ECD (2017), Makng Dspute Resoluton More Effectve - MAP Peer Revew Report, Unted Kngdom (Stage 1): Inclusve Framework on BEPS: Acton 14, ECD/G20 Base Eroson and Proft Shftng Project, ECD Publshng, Pars. ISB (prnt) ISB (PDF) Seres: ECD/G20 Base Eroson and Proft Shftng Project ISS (prnt) ISS (onlne) The statstcal data for Israel are suppled by and under the responsblty of the relevant Israel authortes. The use of such data by the ECD s wthout prejudce to the status of the Golan Heghts, East Jerusalem and Israel settlements n the West Bank under the terms of nternatonal law. Photo credts: Cover nnog-fotola.com Corrgenda to ECD publcatons may be found on lne at: ECD 2017 ou can copy, download or prnt ECD content for your own use, and you can nclude excerpts from ECD publcatons, databases and multmeda products n your own documents, presentatons, blogs, webstes and teachng materals, provded that sutable acknowledgement of ECD as source and copyrght owner s gven. All requests for publc or commercal use and translaton rghts should be submtted to rghts@oecd.org. Requests for permsson to photocopy portons of ths materal for publc or commercal use shall be addressed drectly to the Copyrght Clearance Center (CCC) at nfo@copyrght.com or the Centre franças d explotaton du drot de cope (CFC) at contact@cfcopes.com.

5 FREWRD 3 Foreword The ntegraton of natonal economes and markets has ncreased substantally n recent years, puttng a stran on the nternatonal tax rules, whch were desgned more than a century ago. Weaknesses n the current rules create opportuntes for base eroson and proft shftng (BEPS), requrng bold moves by polcy makers to restore confdence n the system and ensure that profts are taxed where economc actvtes take place and value s created. Followng the release of the report Addressng Base Eroson and Proft Shftng n February 2013, ECD and G20 countres adopted a 15-pont Acton Plan to address BEPS n September The Acton Plan dentfed 15 actons along three key pllars: ntroducng coherence n the domestc rules that affect cross-border actvtes, renforcng substance requrements n the exstng nternatonal standards, and mprovng transparency as well as certanty. After two years of work, measures n response to the 15 actons were delvered to G20 Leaders n Antalya n ovember All the dfferent outputs, ncludng those delvered n an nterm form n 2014, were consoldated nto a comprehensve package. The BEPS package of measures represents the frst substantal renovaton of the nternatonal tax rules n almost a century. nce the new measures become applcable, t s expected that profts wll be reported where the economc actvtes that generate them are carred out and where value s created. BEPS plannng strateges that rely on outdated rules or on poorly co-ordnated domestc measures wll be rendered neffectve. Implementaton s now the focus of ths work. The BEPS package s desgned to be mplemented va changes n domestc law and practces, and va treaty provsons. Wth the negotaton for a multlateral nstrument (MLI) havng been fnalsed n 2016 to facltate the mplementaton of the treaty related measures, 67 countres sgned the MLI on 7 June 2017, pavng the way for swft mplementaton of the treaty related measures. ECD and G20 countres also agreed to contnue to work together to ensure a consstent and co-ordnated mplementaton of the BEPS recommendatons and to make the project more nclusve. Globalsaton requres that global solutons and a global dalogue be establshed whch go beyond ECD and G20 countres. A better understandng of how the BEPS recommendatons are mplemented n practce could reduce msunderstandngs and dsputes between governments. Greater focus on mplementaton and tax admnstraton should therefore be mutually benefcal to governments and busness. Proposed mprovements to data and analyss wll help support ongong evaluaton of the quanttatve mpact of BEPS, as well as evaluatng the mpact of the countermeasures developed under the BEPS Project. As a result, the ECD establshed an Inclusve Framework on BEPS, brngng all nterested and commtted countres and jursdctons on an equal footng n the Commttee on Fscal Affars and all ts subsdary bodes. The Inclusve Framework, whch already has more than 100 members, wll montor and peer revew the mplementaton of the mnmum standards as well as complete the work on standard settng to address BEPS ssues. In addton to BEPS Members, other nternatonal organsatons and regonal tax bodes are nvolved n the work of the Inclusve Framework, whch also consults busness and the cvl socety on ts dfferent work streams. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

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7 TABLE F CTETS 5 Table of contents Foreword... 3 Table of contents... 5 Abbrevatons and acronyms... 7 Executve summary... 9 Introducton Avalable mechansms n the Unted Kngdom to resolve tax treaty-related dsputes Recent developments n the Unted Kngdom Bass for the peer revew process vervew of MAP caseload n the Unted Kngdom General outlne of the peer revew report Part A Preventng Dsputes [A.1] Include Artcle 25(3), frst sentence, of the ECD Model Tax Conventon n tax treates 16 [A.2] Provde roll-back of blateral APAs n approprate cases Bblography Part B Avalablty and Access to MAP [B.1] Include Artcle 25(1) of the ECD Model Tax Conventon n tax treates [B.2] Allow submsson of MAP requests to the competent authorty of ether treaty partner, or, alternatvely, ntroduce a blateral consultaton or notfcaton process [B.3] Provde access to MAP n transfer prcng cases [B.4] Provde access to MAP n relaton to the applcaton of ant-abuse provsons [B.5] Provde access to MAP n cases of audt settlements [B.6] Provde access to MAP f requred nformaton s submtted [B.7] Include Artcle 25(3), second sentence, of the ECD Model Tax Conventon n tax treates 30 [B.8] Publsh clear and comprehensve MAP gudance [B.9] Make MAP gudance avalable and easly accessble and publsh MAP profle [B.10] Clarfy n MAP gudance that audt settlements do not preclude access to MAP Part C Resoluton of MAP Cases [C.1] Include Artcle 25(2), frst sentence, of the ECD Model Tax Conventon n tax treates 39 [C.2] Seek to resolve MAP cases wthn a 24-month average tmeframe [C.3] Provde adequate resources to the MAP functon [C.4] Ensure staff n charge of MAP has the authorty to resolve cases n accordance wth the applcable tax treaty [C.5] Use approprate performance ndcators for the MAP functon [C.6] Provde transparency wth respect to the poston on MAP arbtraton MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

8 6 TABLE F CTETS Part D Implementaton of MAP Agreements [D.1] Implement all MAP agreements [D.2] Implement all MAP agreements on a tmely bass [D.3] Include Artcle 25(2), second sentence, of the ECD Model Tax Conventon n tax treates or alternatve provsons n Artcle 9(1) and Artcle 7(2) Summary Annex A Tax Treaty etwork of Unted Kngdom Annex B MAP Statstcs Pre-2016 Cases Annex C MAP Statstcs Post-2015 Cases Glossary Fgures Fgure C.1 Fgure C.2 Fgure C.3 Fgure C.4 Unted Kngdom's MAP nventory End nventory on 31 December 2106 (322 cases) Cases resolved durng the Reportng Perod (62 cases) Average tme (n months) MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

9 ABBREVIATI AD ACRMS 7 Abbrevatons and Acronyms APA Advance Prcng Arrangement FTA Forum on Tax Admnstraton HMRC Her Majesty s Revenue and Customs MAP Mutual Agreement Procedure ECD rgansaton for Economc Co-operaton and Development TIPA 2010 Taxaton of Internatonal and ther Provsons Act 2010 MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

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11 EXECUTIVE SUMMAR 9 Executve summary The Unted Kngdom has a very large tax treaty network wth over 125 tax treates and has sgned and ratfed the EU Arbtraton Conventon. The Unted Kngdom has an establshed Mutual Agreement Procedure (MAP) program and has extensve experence n resolvng MAP cases. It has a large MAP nventory wth a consderable number of new cases submtted each year and more than 300 cases pendng on 31 December 2016, of whch 65% concern allocaton/attrbuton cases. verall the Unted Kngdom meets most of the elements of the Acton 14 Mnmum Standard. Where t has defcences, the Unted Kngdom s workng to address them. Almost all of the Unted Kngdom s tax treates nclude a provson relatng to MAP, however, 15 treates do not nclude such provson. Those treates that nclude a MAP provson generally follow paragraphs 1 through 3 of Artcle 25 of the Model Tax Conventon on Income and on Captal 2014 (ECD Model Tax Conventon, ECD 2015). Its treaty network s largely consstent wth the requrements of the Acton 14 Mnmum Standard, except manly for the fact that: two-thrds of ts tax treates do not nclude a provson requrng competent authortes to consult together for the elmnaton of double taxaton n cases not provded for n the tax treaty (as requred under Artcle 25(3), second sentence); and two-thrds of ts tax treates do not nclude a provson stpulatng that mutual agreements shall be mplemented notwthstandng any tme lmts n domestc law (whch s requred under Artcle 25(2), second sentence), or nclude the alternatve provsons for Artcle 9(1) and Artcle 7(2) to set a tme lmt for makng transfer prcng adjustments. In order to be fully complant wth all four key areas of an effectve dspute resoluton mechansm under the Acton 14 Mnmum Standard, the Unted Kngdom needs to amend and update a sgnfcant porton of ts tax treates. In ths respect, the Unted Kngdom recently sgned, wthout any reservatons on the MAP artcle, the Multlateral Instrument potentally coverng almost all of ts tax treates. Where treates wll not be amended upon entry nto force of ths Multlateral Instrument, the Unted Kngdom reported that t wll put n place a plan to update all of ts tax treates to be complant wth the requrements under the Acton 14 Mnmum Standard, thereby prortsng those treates where dsputes are most lkely to arse or where the defcences are most lkely to have a practcal effect. Furthermore, the Unted Kngdom opted for the arbtraton part of the Multlateral Instrument. The Unted Kngdom meets the Acton 14 Mnmum Standard concernng the preventon of dsputes. It has n place a blateral APA program. Ths APA program also enables taxpayers to request rollbacks of blateral APAs. The Unted Kngdom also meets the requrements regardng the avalablty and access to MAP under the Acton 14 Mnmum Standard, but needs to supplement ts MAP gudance. It provdes access to MAP n all elgble cases. It has n place a notfcaton and consultaton process for those stuatons n whch the Unted Kngdom competent authorty consders the objecton rased by taxpayers n a MAP request as not justfed. It has MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

12 10 EXECUTIVE SUMMAR comprehensve gudance on nter ala the avalablty of MAP and on how the MAP functon n the Unted Kngdom s construed and appled n practce. Ths gudance, however, does not specfy whether the Unted Kngdom wll also grant access to MAP for cases where taxpayers and Her Majesty Revenue & Customs have entered nto an audt settlement, although n practce such access s always granted. The Unted Kngdom ndcated t wll update ths gudance n 2017 to nclude nformaton on the elements of the Acton 14 Mnmum Standard and best practces. Furthermore, the Unted Kngdom s competent authorty operates fully ndependently from the audt functon of the tax authortes and uses a pragmatc approach to resolve MAP cases n an effectve and effcent manner. Its organsaton s adequate and the performance ndcators used are approprate to perform the MAP functon. The Unted Kngdom therefore meets the requrements under the Acton 14 Mnmum Standard n relaton to the resoluton of MAP cases. Concernng the average tme needed to resolve MAP cases, the MAP statstcs for the year 2016 are as follows: 2016 penng Inventory Cases started Average tme Cases End Closed nventory to resolve cases (n months)(*) Attrbuton/allocat on cases ther cases Total (*) The average tme taken for resolvng MAP cases for post-2015 cases follows the MAP Statstcs Reportng Framework. For computng the average tme taken for resolvng pre-2016 MAP cases, the Unted Kngdom used as a start date the date when the MAP request was receved and as the end date the competent authortes concerned reached a formal agreement. Where competent authortes requre taxpayers to confrm ther acceptance of the agreement reached, the end date s computed as the date the competent authortes have receved ths confrmaton. These fgures pont out that the number of cases the Unted Kngdom resolved n total s around 50% of the number of all new cases receved n 2016, and ts MAP nventory as per 31 December 2016 ncreased by approxmately 25% as compared to ts nventory as per 1 January Although the current avalable resources for the MAP functon n the Unted Kngdom are n prncple adequate, more resources may be necessary to acheve a net reducton of ts MAP nventory. Furthermore, the Unted Kngdom competent authorty resolves MAP cases on average wthn a tmeframe of 24 months, although the average tme necessary to resolve attrbuton/allocaton was slghtly longer (25.42 months). Lastly, the Unted Kngdom also meets the Acton 14 Mnmum Standard as regards the mplementaton of MAP agreements. The Unted Kngdom montors mplementaton and no ssues have surfaced throughout the peer revew process. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

13 ITRDUCTI 11 Introducton Avalable mechansms n the Unted Kngdom to resolve tax treaty-related dsputes The Unted Kngdom has entered nto 129 tax treates on ncome (and/or captal), of whch 128 are n force.1 These 129 treates apply to 132 jursdctons.2 All but 15 of these 129 treates provde for a mutual agreement procedure for resolvng dsputes on the nterpretaton and applcaton of the provsons of the tax treaty.3 In addton, 21 of the 129 treates provde for an arbtraton procedure as a fnal stage to the mutual agreement procedure.4 The Unted Kngdom s also a sgnatory to the EU Arbtraton Conventon, whch provdes for a mutual agreement procedure supplemented wth an arbtraton procedure for settlng transfer prcng dsputes and dsputes on the attrbuton of profts to permanent establshments between EU Member States.5 The legal framework for the mutual agreement procedure n the Unted Kngdom s governed by sectons of the Taxaton of Internatonal and ther Provsons Act 2010 ( TIPA 2010 ).6 Specfcally wth respect to the EU Arbtraton Conventon, the legslatve framework s governed by sectons of the TIPA In the Unted Kngdom, the competent authorty functon s delegated to the Commssoners for Her Majesty s Revenue and Customs ( HMRC ) or ther authorsed representatves. In practce, the followng teams handle MAP cases: a) Transfer prcng and proft attrbuton to permanent establshments: CTIS Busness Internatonal TP Team;7 b) Corporate resdence and wthholdng tax: CTIS Busness Internatonal Foregn Profts Team; and c) Personal tax. Wthn HMRC approxmately 30 persons work n the CTIS Busness Internatonal TP team and handle MAP cases related to transfer prcng, whereby four persons provde support functons. The CTIS Busness Internatonal Foregn Profts Team conssts of eght persons, whereby two persons are responsble for handlng MAP cases relatng to corporate resdence and wthholdng tax. In addton, the team handlng MAP cases relatng to personal taxes consst of four persons. The Unted Kngdom ssued gudance on the governance and admnstraton of the mutual agreement procedure n the Statement of Practce 1/2011 ( MAP gudance ), whch s avalable at:8 MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

14 12 ITRDUCTI Recent developments n the Unted Kngdom The Unted Kngdom fnalsed treaty negotatons wth Colomba (2 ovember 2016) and Lesotho (3 ovember 2016). The treaty wth Colomba s a newly negotated treaty, whle the treaty wth Lesotho replaces an exstng treaty. ether negotated treates, however, have yet entered nto force. The Unted Kngdom reported that t envsages updatng ts domestc gudance on the mutual agreement procedure n the course of 2017, whch shall nter ala nclude ts polcy on: () audt settlements and access to MAP, () avalablty of MAP n case of bona fde taxpayer-ntated foregn adjustments, () suspenson of collecton procedures durng the applcaton of the MAP, (v) chargng and refundng of nterest and penaltes n relaton to MAP and (v) the possblty of mult-year resoluton of tax dsputes through MAP. Furthermore, the Unted Kngdom also reported that t ntends to adopt the necessary amendments to the MAP artcle under ts tax treates, so as to be complant wth the Acton 14 Mnmum Standard n respect of all the relevant tax treates, by sgnng the Multlateral Conventon to Implement Tax Treaty Related Measures to Prevent Base Eroson and Proft Shftng ( Multlateral Instrument ) and through future blateral negotatons. Bass for the peer revew process The peer revew process entals an evaluaton of the Unted Kngdom s mplementaton of the Acton 14 Mnmum Standard through an analyss of ts legal and admnstratve framework relatng to the mutual agreement procedure, as governed by ts tax treates, domestc legslaton and regulatons, as well as ts MAP programme gudance and the practcal applcaton of that framework. The revew process performed s desk-based and conducted through specfc questonnares completed by the Unted Kngdom, ts peers and taxpayers. For the purpose of ths report and the statstcs below, n assessng whether the Unted Kngdom s complant wth the elements of the Acton 14 Mnmum Standard that relate to a specfc treaty provson, the newly negotated treates or the treates as modfed by a protocol, as descrbed above, were taken nto account, even f t concerned a replacement of an exstng treaty. Furthermore, the treaty analyss also takes nto account the treaty wth the former USSR, ugoslava and Czechoslovaka for those jursdctons for whch ths treaty s stll beng appled by the Unted Kngdom (see above). As t concerns three tax treates that are applcable to multple jursdctons, each of these treates are only counted as three treates for ths purpose. Reference s made to Annex A for the overvew of the Unted Kngdom s tax treates regardng the mutual agreement procedure. The questonnares for the peer revew process were sent to the Unted Kngdom and the peers on 5 December Whle the commtment to the Acton 14 Mnmum Standard only starts from 1 January 2016, the Unted Kngdom opted to provde nformaton on perod startng as from 1 January 2015 (the Look back perod ) and also requested peer nput relatng to the Look back perod. In addton to ts assessment on the complance wth the Acton 14 Mnmum Standard, the Unted Kngdom also asked for peer nput on best practces. In total 22 peers provded nput: Australa, Belgum, Canada, People s Republc of Chna, Denmark, France, Germany, Inda, Ireland, Italy, Japan, Lthuana, The etherlands, ew Zealand, orway, Portugal, Sngapore, South Afrca, Span, Sweden, Swtzerland and the Unted States. These peers represent approxmately 90% of post-2015 MAP cases n the MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

15 ITRDUCTI 13 Unted Kngdom s nventory on 31 December Input was also receved from taxpayers. Broadly all peers ndcated havng good workng relatonshps wth the Unted Kngdom wth regard to MAP, some of them emphassng the effcency of the Unted Kngdom s Competent Authorty. The Unted Kngdom provded extensve answers n ts questonnare, whch was submtted on tme. The Unted Kngdom was very responsve n the course of the draftng of the peer revew report by respondng tmely and comprehensvely to requests for addtonal nformaton, and provded further clarty where necessary. In addton, the Unted Kngdom provded the followng nformaton: MAP profle;9 and MAP statstcs10 accordng to the MAP Statstcs Reportng Framework11 (see below). Fnally, the Unted Kngdom s an actve member of the FTA MAP Forum and has shown good cooperaton durng the peer revew process. The Unted Kngdom provded detaled peer nput and made constructve suggestons on how to mprove the process wth the concerned assessed jursdctons. The Unted Kngdom also provded peer nput on the best practces for a number of jursdctons that asked for t. vervew of MAP caseload n the Unted Kngdom The analyss of the Unted Kngdom s MAP caseload relates to the perod startng on 1 January 2016 (the Reportng Perod ).Accordng to the statstcs provded by the Unted Kngdom, on 31 December 2016 ts MAP nventory was 322 cases, 207 of whch concern attrbuton/allocaton cases and 115 other cases. Durng the Reportng Perod 122 cases were ntated and 62 cases were closed. General outlne of the peer revew report Ths report ncludes an evaluaton of the Unted Kngdom s mplementaton of the Acton 14 Mnmum Standard. The report comprses the followng four sectons: A. Preventng Dsputes; B. Avalablty and Access to MAP; C. Resoluton of MAP cases; and D. Implementaton of MAP agreements. Each of these sectons s dvded nto elements of the Acton 14 Mnmum Standard, as descrbed n the terms of reference to montor and revew the mplementng of the BEPS Acton 14 Mnmum Standard to make dspute resoluton mechansms more effectve ( Terms of Reference ).12 Apart from analysng the Unted Kngdom s legal framework and ts admnstratve practce, the report also ncorporates peer nput and responses to such nput by the Unted Kngdom. Furthermore, the report depcts the changes adopted and plans shared by the Unted Kngdom to mplement elements of the Acton 14 Mnmum Standard where relevant. The concluson of each element dentfes areas for mprovement (f any) and provdes for recommendatons how the specfc area for mprovement should be addressed. The objectve of Acton 14 Mnmum Standard s to make dspute resoluton mechansms more effectve and concerns a contnuous effort. Therefore, ths peer revew MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

16 14 ITRDUCTI report ncludes recommendatons that the Unted Kngdom contnues to act n accordance wth a gven element of the Acton 14 Mnmum Standard, even f there s no area for mprovement for ths specfc element. otes 1. The tax treates the Unted Kngdom has entered nto are avalable at: (accessed on 10 September 2017). 2. The Unted Kngdom contnues to apply the 1985 treaty wth the former USSR n respect of Belarus, the 1981 treaty wth former ugoslava to Bosna and Herzegovna, Montenegro and Serba, and the 1991 treaty wth former Czechoslovaka to the Czech Republc and the Slovak Republc. 3. Ths concerns treates wth Antgua, Belze, Brune, Greece, Grenada, Israel, Jamaca, Krbat, Malaw, Myanmar, amba, Serra Leone, the Solomon Islands, Sant. Ktts and evs and Tuvalu. 4. Ths concerns treates wth Albana, Algera, Armena, Bahran, Belgum, Canada, France, Germany, Iceland, Japan, Kosovo, Lechtensten, Mexco, the etherlands, orway, Qatar, Span, Sweden, Swtzerland, Tajkstan and Uruguay. See for a dscusson element C.6 of ths report. Reference s made to Annex A for the overvew of the Unted Kngdom s tax treates that nclude an arbtraton clause. 5. Conventon on the elmnaton of double taxaton n connecton wth the adjustment of profts of assocated enterprses (90/436/EEC) of July 23, Avalable at: (accessed on 10 September 2017). 7. CTIS stands for CT Internatonal & Stamps Drectorate. 8. Ths gudance s reproduced n the Unted Kngdom s nternatonal gudance manual, whch s avalable at: (accessed on 10 September 2017). 9. Avalable at: The MAP statstcs of the Unted Kngdom are ncluded n Annex B and C of ths report. 11. Map Statstcs Reportng Framework, n Peer Revew Documents (ECD 2016): (accessed on 22 August 2017). 12. Terms of reference to montor and revew the mplementng of the BEPS Acton 14 Mnmum Standard to make dspute resoluton mechansms more effectve n Peer Revew Documents (ECD, 2016): (accessed on 22 August 2017). MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

17 ITRDUCTI 15 Bblography ECD (2016), BEPS Acton 14 on More Effectve Dspute Resoluton Mechansms, Peer Revew Documents, (accessed on 22 August 2017). ECD (2015), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars, MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

18 16 PART A - PREVETIG DISPUTES Part A Preventng Dsputes [A.1] Include Artcle 25(3), frst sentence, of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a provson whch requres the competent authorty of ther jursdcton to endeavour to resolve by mutual agreement any dffcultes or doubts arsng as to the nterpretaton or applcaton of ther tax treates. 1. Cases may arse concernng the nterpretaton or the applcaton of tax treates that do not necessarly relate to ndvdual cases, but are more of a general nature. Incluson of the frst sentence of Artcle 25(3) of the ECD Model Tax Conventon (ECD, 2015) n tax treates nvtes and authorses competent authortes to solve these cases, whch may avod submsson of MAP requests and/or future dsputes from arsng, and whch may renforce the consstent blateral applcaton of tax treates. Current stuaton of the Unted Kngdom s tax treates 2. ut of the Unted Kngdom s 129 tax treates, 114 contan a provson equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) requrng ther competent authorty to endeavour to resolve by mutual agreement any dffcultes or doubts arsng as to the nterpretaton or applcaton of the tax treaty.1 The remanng 15 treates that do not nclude such provson concern the treates mentoned n the Introducton that do not provde for any MAP artcle at all. Antcpated modfcatons 3. For those treates that do not contan a provson equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015), the Unted Kngdom ndcated that t ntends to mplement element A.1 for all ts exstng tax treates by sgnng the Multlateral Instrument. In that regard, the Unted Kngdom envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument concernng the mutual agreement procedure for all of ts exstng tax treates to be covered by that nstrument. Furthermore, the Unted Kngdom ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, the Unted Kngdom reported that t ntends to put n place a plan to update all of ts tax treates to be complant wth element A.1, prortsng those treates where dsputes are most lkely to arse or where the defcences are most lkely to have a practcal effect. In addton, the Unted Kngdom wll seek to nclude Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) n all of ts future treates. 4. Several peers also reported that the provsons of ther tax treaty wth the Unted Kngdom do not meet all the requrements of the relevant elements of the Acton 14 MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

19 PART A - PREVETIG DISPUTES 17 Mnmum Standard and that they envsage mplementng these elements by sgnng the Multlateral Instrument. Concluson Areas for Improvement Recommendatons 15 out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015). Where treates do not nclude the equvalent of Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. [A.1] [A.2] Provde roll-back of blateral APAs n approprate cases Jursdctons wth blateral advance prcng arrangement ( APA ) programmes should provde for the roll-back of APAs n approprate cases, subject to the applcable tme lmts (such as statutes of lmtaton for assessment) where the relevant facts and crcumstances n the earler tax years are the same and subject to the verfcaton of these facts and crcumstances on audt. 5. An APA s an arrangement that determnes, n advance of controlled transactons, an approprate set of crtera (e.g. method, comparables and approprate adjustment thereto, crtcal assumptons as to future events) for the determnaton of the transfer prcng for those transactons over a fxed perod of tme.2 The methodology to be appled prospectvely under a blateral or multlateral APA may be relevant n determnng the treatment of comparable controlled transactons n prevous fled years. The roll-back of an APA to these prevous fled years may be helpful to prevent or resolve potental transfer prcng dsputes. The Unted Kngdom s APA programme 6. The Unted Kngdom s under ts domestc legslaton authorsed to enter nto unlateral, blateral and multlateral APAs. It has run an APA programme snce The legslaton enablng the Unted Kngdom to enter nto APAs s to be found n Sectons of TIPA It further ssued gudance on APAs n ts Statement of Practce 2/2010, whch was lastly updated n ovember Ths gudance sets out n detal what an APA s, when and by whom they can be requested, how the process for obtanng an APA n the Unted Kngdom functons and what nformaton s to be ncluded n a request for an APA. The Unted Kngdom does not requre a specfc tmelne for flng of APA requests. 7. In paragraph 25 of ts APA gudance t s stpulated that the Unted Kngdom apples APAs as from the date of entry nto force as specfed n the APA agreement and for a specfc perod of tme. Typcally, the term of applcaton s three to fve years. As the stuaton may occur that an APA agreement s only reached after the fscal years for whch the APA s requested have ended, domestc legslaton of the Unted Kngdom specfcally secton 224 TIPA allows the APA to be effectve for those fscal years as MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

20 18 PART A - PREVETIG DISPUTES well.4 For example, f an APA request s submtted for fscal years and s entered nto n 2018, the Unted Kngdom apples the APA for all fve years requested. Roll-back of blateral APAs 8. In paragraph 28 of ts APA gudance t s stpulated that the agreed transfer prcng methodology n the APA may be relevant for earler fscal years than those covered by the APA. The Unted Kngdom allows for the roll-back of the APA to such earler fscal years f the partcular facts and crcumstances surroundng those years are substantally the same and f for those fscal years the Unted Kngdom s legal framework allows taxpayers to amend ther self-assessment. Ths latter mples that those fscal years have not been fnalsed. If, however, tax assessments have been fnalsed for those fscal years, roll-back s only possble f under Unted Kngdom s domestc legslaton domestc tme lmts stll permt an amendment or a MAP request to be made. In practce, the Unted Kngdom would for fnalsed fscal years requre a MAP request to be made. Practcal applcaton of roll-back of blateral APAs 9. Peers generally reported that they do negotate and agree blateral APAs wth the Unted Kngdom. ot all peers, however, have experence wth roll-back of such blateral APAs for the years under revew or n general. In total seven peers reported they have experences wth the Unted Kngdom regardng roll-back of blateral APAs. Ther experence pont out that roll-back of blateral APAs s possble n approprate cases and that the Unted Kngdom s wllng to enter nto dscussons hereon. These peers further reported postve workng experences wth the Unted Kngdom n the process of effectvely provdng for roll-back of APAs. In addton, taxpayers also provded nput entalng that the Unted Kngdom s wllng to apply an APA not only to audted fscal years, but also to all open fscal years wth the possblty of a roll-back. 10. The Unted Kngdom does not have n place a mechansm that montors () the number of APA requests that concern the roll-back of an exstng APA and () for whch of such requests a roll-back was granted. In that regard there s no data avalable on the number of cases for whch taxpayers requested for the roll-back of an APA and n how many cases such roll-back was granted. 11. Peers reported that snce 1 January 2015 taxpayers have n approxmately cases requested for roll-back of ther blateral APAs to whch the Unted Kngdom s a sgnatory party. As regards those requests, n four cases a roll-back was agreed on by the competent authortes and n four cases the request s stll pendng. For the other reported requests no nformaton s avalable on whether such roll-back was granted or wll be granted. Antcpated modfcatons 12. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element A.2. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

21 PART A - PREVETIG DISPUTES 19 Concluson Areas for Improvement [A.2] Recommendatons The Unted Kngdom should contnue to provde for roll-back of blateral APAs n approprate cases as t has done thus far. To keep a record of the number of APAs where a roll-back was and was not granted, the Unted Kngdom could ntroduce a trackng system. - otes 1. These 114 treates nclude the treaty wth former USSR that s contnued to be appled to Belarus, the treaty wth former Czechoslovaka that s contnued to be appled to the Czech Republc and the Slovak Republc and the treaty wth former ugoslava that s contnued to beng appled to Bosna and Herzegovna, Montenegro and Serba. 2. Ths descrpton of an APA s based on the defnton of an APA n the ECD Transfer Prcng Gudelnes (ECD, 2017) for Multnatonal Enterprses and Tax Admnstratons. 3. Avalable at: (accessed on 10 September 2017). Ths gudance has been reproduced n Gudance ITM422000, whch s avalable at: (accessed on 10 September 2017). 4. See also paragraph 26 of the Unted Kngdom s APA gudance. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

22 20 PART A - PREVETIG DISPUTES Bblography ECD (2017), ECD Transfer Prcng Gudelnes for Multnatonal Enterprses and Tax Admnstratons 2017, ECD Publshng, Pars, ECD (2015), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars, MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

23 PART B - AVAILABILIT AD ACCESS T MAP 21 Part B Avalablty and Access to MAP [B.1] Include Artcle 25(1) of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a MAP provson whch provdes that when the taxpayer consders that the actons of one or both of the Contractng Partes result or wll result for the taxpayer n taxaton not n accordance wth the provsons of the tax treaty, the taxpayer, may rrespectve of the remedes provded by the domestc law of those Contractng Partes, make a request for MAP assstance, and that the taxpayer can present the request wthn a perod of no less than three years from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provsons of the tax treaty. 13. For resolvng cases of taxaton not n accordance wth the provsons of the tax treaty, t s necessary that tax treates nclude a provson allowng taxpayers to request a mutual agreement procedure and that ths procedure can be requested rrespectve of the remedes provded by the domestc law of the treaty partners. In addton, to provde certanty to taxpayers and competent authortes on the avalablty of the mutual agreement procedure, a mnmum perod of three years for submsson of a MAP request, begnnng on the date of the frst notfcaton of the acton resultng n taxaton not n accordance wth the provsons of the tax treaty, s the baselne. Current stuaton of the Unted Kngdom s tax treates Incluson of Artcle 25(1), frst sentence of the ECD Model Tax Conventon 14. ut of the Unted Kngdom s 129 tax treates, two treates contan a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as changed by the Makng Dspute Resoluton Mechansms More Effectve, Acton Fnal Report (Acton 14 fnal report, ECD 2015b), allowng taxpayers to submt a MAP request to the competent authorty of ether state when they consder that the actons of one or both of the treaty partners result or wll result for the taxpayer n taxaton not n accordance wth the provsons of the tax treaty and that can be requested rrespectve of the remedes provded by the domestc law of ether state. Further, 62 treates nclude a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of that report. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

24 22 PART B - AVAILABILIT AD ACCESS T MAP 15. The 65 remanng tax treates that do not contan a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a), ether as changed by the Acton 14 fnal report (ECD, 2015b) or as t read pror to that report can be categorsed as follows: Provson umber of treates A varaton to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), whereby the taxpayer can only submt a MAP request to the competent authortes of the contractng state of whch they are resdent. 491 o MAP provson ncluded n the tax treaty. 15 A varaton to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), whereby () the taxpayer can only submt a MAP request to the competent authorty of the contractng state n whch t s a resdent and () the taxpayer can submt a MAP request rrespectve of domestc avalable remedes, but whereby pursuant to a protocol provson the taxpayer s also requred to ntate these remedes when submttng a MAP request The 49 treates mentoned above are consdered not to have the full equvalent of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), snce taxpayers are not allowed to submt a MAP request n the state of whch they are a natonal where the case comes under the non-dscrmnaton artcle. However, for the followng reasons all 49 treates are consdered to be n lne wth ths part of element B.1: The relevant tax treaty does not nclude a non-dscrmnaton provson and only apples to resdents of one of the states (sx treates); The non-dscrmnaton provson of the relevant tax treaty only covers natonals that are resdent of one of the contractng states, followng whch t s logcal to only allow for the submsson of MAP requests to the state of whch the taxpayer s a resdent (43 treates); and The non-dscrmnaton provson of the relevant tax treaty does not nclude the equvalent of Artcle 24(1) of the ECD Model Tax Conventon (ECD, 2015a) relatng to natonals (one treaty). Incluson of Artcle 25(1), second sentence of the ECD Model Tax Conventon 17. ut of the Unted Kngdom s 129 tax treates, 40 contan a provson equvalent to Artcle 25(1), second sentence, of the ECD Model Tax Conventon (ECD, 2015a) allowng taxpayers to submt a MAP request wthn a perod of three years from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provsons of the partcular tax treaty. 18. The remanng 91 treates that do not contan such provson can be categorsed as follows: MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

25 PART B - AVAILABILIT AD ACCESS T MAP 23 Provson umber of treates o MAP provson ncluded n the tax treaty 15 Flng perod less than three years for a MAP request (two years) 1 o flng perod for a MAP request The large number of devatons from Artcle 25(1), second sentence, of the ECD Model Tax Conventon (ECD, 2015a) can be clarfed by the fact that the Unted Kngdom has n paragraph 97 of the Commentary to Artcle 25 of the ECD Model Tax Conventon (ECD, 2015a) reserved ts poston on Artcle 25(1), second sentence, on the grounds that t conflcts wth the sx year tme lmt under ts domestc legslaton. Antcpated modfcatons 20. For those treates that do not contan a provson equvalent to Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015a), the Unted Kngdom ndcated that t ntends to mplement element B.1 for all ts exstng tax treates by sgnng the Multlateral Instrument. In that regard, the Unted Kngdom envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument concernng the mutual agreement procedure for all of ts exstng tax treates to be covered by that nstrument. Furthermore, the Unted Kngdom ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, the Unted Kngdom reported that t ntends to put n place a plan to update all of ts tax treates to be complant wth element B.1, prortsng those treates where dsputes are most lkely to arse or where the defcences are most lkely to have a practcal effect. In addton, the Unted Kngdom wll seek to nclude Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015a) n all of ts future treates. 21. The Unted Kngdom reported that t has appled for the wthdrawal of the reservaton on Artcle 25(1), second sentence, as mentoned under paragraph 19 above, n the comng update of the ECD Model Tax Conventon (ECD, 2015a). 22. Several peers also reported that the provsons of ther tax treaty wth the Unted Kngdom do not meet all the requrements of the relevant elements of the Acton 14 Mnmum Standard and that they envsage mplementng these elements by sgnng the Multlateral Instrument. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

26 24 PART B - AVAILABILIT AD ACCESS T MAP Concluson Areas for Improvement 17 out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015a). f those 17 tax treates: o o [B.1] 16 do not contan a provson that s the equvalent of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a), ether as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b) or as amended by that fnal report; and ne does not contan a provson based on Artcle 25(1), second sentence of the ECD Model Tax Conventon (ECD, 2015a), allowng taxpayers to submt a MAP request wthn a perod of no less than three years as from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. Recommendatons Where treates do not nclude the equvalent of Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015a) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. Ths concerns both: o o a provson that s equvalent to Artcle 25(1), frst sentence of the ECD Model Tax Conventon (ECD, 2015a) ether: a) As amended n the Acton 14 fnal report (ECD, 2015b); or b) As t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), thereby ncludng the full sentence of such provson; and a provson that allows taxpayers to submt a MAP request wthn a perod of no less than three years as from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. [B.2] Allow submsson of MAP requests to the competent authorty of ether treaty partner, or, alternatvely, ntroduce a blateral consultaton or notfcaton process Jursdctons should ensure that ether () ther tax treates contan a provson whch provdes that the taxpayer can make a request for MAP assstance to the competent authorty of ether Contractng Party, or () where the treaty does not permt a MAP request to be made to ether Contractng Party and the competent authorty who receved the MAP request from the taxpayer does not consder the taxpayer s objecton to be justfed, the competent authorty should mplement a blateral consultaton or notfcaton process whch allows the other competent authorty to provde ts vews on the case (such consultaton shall not be nterpreted as consultaton as to how to resolve the case). 23. In order to ensure that all competent authortes concerned are aware of MAP requests submtted, for a proper consderaton of the request by them and to ensure that taxpayers have effectve access to MAP n elgble cases, t s essental that all tax treates nclude a provson that ether allows taxpayers to submt a MAP request to the competent authorty: () of ether treaty partner; or n the absence of such provson; () where t s a resdent, or to the competent authorty of the state of whch they are a natonal f ther cases come under the non-dscrmnaton artcle. In such cases, jursdctons should have n place a blateral consultaton or notfcaton process where a competent authorty consders the objecton rased by the taxpayer n a MAP request as beng not justfed. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

27 PART B - AVAILABILIT AD ACCESS T MAP 25 Domestc blateral consultaton or notfcaton process n place 24. ut of the Unted Kngdom s 129 treates, two treates contan a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as changed by the Acton 14 fnal report (ECD, 2015b), allowng taxpayers to submt a MAP request to the competent authorty of ether treaty partner. 25. For the 127 tax treates that do not contan a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as changed by the Acton 14 fnal report (ECD, 2015b), the Unted Kngdom s competent authorty n practce notfes and consults ts treaty partners where access to MAP s dened or when t consders the objecton rased n the MAP request not to be justfed. Practcal applcaton 26. Peers ndcated not beng aware or not beng been consulted/ notfed of a case where the competent authorty of the Unted Kngdom consdered the objecton rased n a MAP request as not justfed. Ths can be explaned by the fact that the competent authorty of the Unted Kngdom has snce 1 January 2015 not consdered an objecton rased n a MAP request as beng not justfed. Antcpated modfcatons 27. The Unted Kngdom ndcated that t ntends to sgn the Multlateral Instrument and by dong so amend the covered tax treates to nclude Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a), as amended by the fnal report on Acton 14, allowng taxpayers to submt a MAP request to the competent authortes of ether contractng state. Where tax treates wll not be amended va the Multlateral Instrument, the Unted Kngdom ntends to amend ts treates va blateral negotatons wth ts treaty partners. In the meantme, the Unted Kngdom wll contnue to apply ts blateral consultaton or notfcaton process where access to MAP s dened or when t consders the objecton rased n the MAP request not to be justfed. Concluson Areas for Improvement [B.2] Recommendatons The Unted Kngdom has n place a process to notfy and/or consult the other competent authorty n cases ts competent authorty consdered the objecton rased n a MAP request as not justfed. Because for the perod under revew no such cases have occurred, t was not possble to assess whether the notfcaton and/or consultaton process s appled n practce. [B.3] Provde access to MAP n transfer prcng cases Jursdctons should provde access to MAP n transfer prcng cases. 28. Where two or more tax admnstratons take dfferent postons on what consttutes arm s length condtons for specfc transactons between assocated enterprses, economc double taxaton may occur. ot grantng access to MAP wth respect to a treaty partner s transfer prcng adjustment, wth a vew to elmnatng the economc double taxaton that may arse from such adjustment, wll lkely frustrate the man objectve of tax treates. Countres should thus provde access to MAP n transfer prcng cases. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

28 26 PART B - AVAILABILIT AD ACCESS T MAP Legal and admnstratve framework 29. ut of the Unted Kngdom s 129 tax treates, 81 contan a provson that s the equvalent of Artcle 9(2) of the ECD Model Tax Conventon (ECD, 2015a), requrng ther state to make a correlatve adjustment n case a transfer prcng adjustment s mposed by the other treaty partner. In 19 treates ths provson s not ncluded n Artcle 9, but n the artcle on the elmnaton of double taxaton. Wth respect to these treates, the Unted Kngdom ndcated that ths may effectvely not lead to the same result as under Artcle 9(2), as elmnaton of double taxaton may not always be provded for (.e. n cases of losses). Furthermore, 4 treates nclude a provson that s smlar to Artcle 9(2) of the ECD Model Tax Conventon (ECD, 2015a), but uses addtonal or dfferent wordng. 30. The Unted Kngdom s a sgnatory to the EU Arbtraton Conventon, whch provdes for a mutual agreement procedure supplemented wth an arbtraton procedure for settlng transfer prcng dsputes and dsputes on the attrbuton of profts to permanent establshments between EU Member States. 31. otwthstandng whether the equvalent of Artcle 9(2) s ncluded n the Unted Kngdom s tax treates and rrespectve of whether ts domestc legslaton enables the grantng of correspondng adjustments, the Unted Kngdom ndcated that t wll always provde access to MAP for transfer prcng cases. In paragraph 3 of ts MAP gudance t s addressed that the mutual agreement procedure may be used to dscuss grantng of correspondng adjustments n relaton to transfer prcng cases.3 In paragraph 10 of ths gudance t s partcularly noted that: The UK s ready to receve the presentaton of a case whether t s the state whch has made a transfer prcng adjustment or whether t s the state beng asked to make a correspondng adjustment for a transfer prcng adjustment made by ts treaty partner. Practcal applcaton 32. The Unted Kngdom reported that t snce 1 January 2015 has not dened access to MAP on the bass that the case concerned a transfer prcng case. 33. Peers ndcated not beng aware of a denal of access to MAP by the Unted Kngdom for transfer prcng cases snce 1 January ne peer, however, noted that n 2015 t rejected one MAP request under the treaty wth the Unted Kngdom that concerned a transfer prcng case. Ths peer reported that t made such rejecton (and not the competent authorty of the Unted Kngdom) on the ground that one of the assocated enterprses was not an entty resdent n the Unted Kngdom and not on the ground that the case tself concerned a transfer prcng case. Antcpated modfcatons 34. The Unted Kngdom reported that t envsages updatng ts MAP gudance by 2017 n relaton to element B.3. Furthermore, for those treates that do not contan a provson equvalent to Artcle 9(2) of the ECD Model Tax Conventon (ECD, 2015a), the Unted Kngdom ndcated that t ntends sgnng the Multlateral Instrument and by dong so ncorporate, where necessary, n all covered tax treates the equvalent of Artcle 9(2) of the ECD Model Tax Conventon (ECD, 2015a). In that regard, the Unted Kngdom envsages not makng any reservatons aganst the modfcatons made by Artcle 17 of the Multlateral Instrument. In addton, the Unted Kngdom wll seek to nclude Artcle 9(2) of the ECD Model Tax Conventon (ECD, 2015a) n all of ts future treates. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

29 PART B - AVAILABILIT AD ACCESS T MAP 27 Concluson Areas for Improvement Recommendatons - As the Unted Kngdom has thus far granted access to the MAP n elgble transfer prcng cases, t should contnue grantng access for these cases. [B.3] [B.4] Provde access to MAP n relaton to the applcaton of ant-abuse provsons Jursdctons should provde access to MAP n cases n whch there s a dsagreement between the taxpayer and the tax authortes makng the adjustment as to whether the condtons for the applcaton of a treaty ant-abuse provson have been met or as to whether the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a treaty. 35. There s no general rule denyng access to MAP n cases of perceved abuse. In order to protect taxpayers from arbtrary applcaton of ant-abuse provsons n tax treates and n order to ensure that competent authortes have a common understandng on such applcaton, t s mportant that taxpayers have access to MAP f they consder the nterpretaton and/or applcaton of a treaty ant-abuse provson as beng ncorrect. Subsequently, to avod cases n whch the applcaton of domestc ant-abuse legslaton s n conflct wth the provsons of a tax treaty, t s also mportant that taxpayers have access to MAP n such cases. Legal and admnstratve framework 36. one of the Unted Kngdom s 129 tax treates allows competent authortes to restrct access to MAP for cases when a treaty ant-abuse provson apples or when there s a dsagreement between the taxpayer and the tax authortes as to whether the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a tax treaty. In addton, also the domestc law and/or admnstratve processes of the Unted Kngdom do not nclude a provson allowng ts competent authorty to lmt access to the MAP for cases n whch there s a dsagreement between the taxpayer and the tax authortes as to whether the condtons for the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a tax treaty. 37. The Unted Kngdom reported that t consders ssues relatng to the applcaton of a treaty ant-abuse provson and the queston whether the applcaton of a domestc antabuse provson s n conflct wth the provson of a tax treaty are wthn the scope of the MAP. The MAP gudance of the Unted Kngdom, however, does not specfy whether taxpayers have access to MAP n such case or n cases n whch there s a dsagreement between the taxpayer and the tax authortes as to whether the condtons for the applcaton of a treaty ant-abuse provson have been met. Practcal applcaton 38. The Unted Kngdom reported that t has snce 1 January 2015 not dened access to MAP n cases n whch there was a dsagreement between the taxpayer and the tax authortes as to whether the condtons for the applcaton of a treaty ant-abuse provson have been met, or as to whether the applcaton of a domestc law ant-abuse provson s conflct wth the provsons of a tax treaty. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

30 28 PART B - AVAILABILIT AD ACCESS T MAP 39. Peers ndcated not beng aware of a denal of access to MAP by the Unted Kngdom n relaton to the applcaton of treaty and/or domestc ant-abuse provsons snce 1 January Antcpated modfcatons 40. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element B.4. Concluson [B.4] Areas for Improvement Recommendatons - As the Unted Kngdom has thus far granted access to the MAP n elgble cases concernng whether the condtons for the applcaton of a treaty ant-abuse provson have been met or whether the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a treaty, t should contnue grantng access for these cases. [B.5] Provde access to MAP n cases of audt settlements Jursdctons should not deny access to MAP n cases where there s an audt settlement between tax authortes and taxpayers. If jursdctons have an admnstratve or statutory dspute settlement/resoluton process ndependent from the audt and examnaton functons and that can only be accessed through a request by the taxpayer, jursdctons may lmt access to the MAP wth respect to the matters resolved through that process. 41. An audt settlement procedure can be valuable to taxpayers by provdng certanty on ther tax poston. evertheless, as double taxaton may not be fully elmnated by agreeng on such settlements, taxpayers should have access to the MAP n such cases, unless they were already resolved va an admnstratve or statutory dsputes settlement/resoluton process that functons ndependent from the audt and examnaton functon and whch s only accessble through a request by taxpayers. Legal and admnstratve framework 42. Audt settlements are avalable n the Unted Kngdom. The Unted Kngdom reported that t wll not preclude access to MAP n cases where the ssues presented by the taxpayer n that request have already been resolved through an audt settlement between the taxpayer and HMRC. In more detal, the Unted Kngdom ndcated that although t s lkely that there wll be an audt settlement before a MAP request s submtted, access to MAP wll be granted f such settlement was already entered nto. In ts Internatonal Manual on transfer prcng and the mutual agreement procedure, t s specfcally addressed that HMRC s nstructed not to agree wth taxpayers on adjustments on the condton that taxpayers wll not seek competent authorty assstance The Unted Kngdom has no admnstratve or statutory dspute settlement/resoluton process n place that allows the Unted Kngdom to deny access to MAP for ssues resolved through that process. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

31 PART B - AVAILABILIT AD ACCESS T MAP 29 Practcal applcaton 44. The Unted Kngdom reported that t has snce 1 January 2015 not dened access to MAP for cases where the ssue presented by the taxpayer has already been dealt wth n an audt settlement between the taxpayer and HMRC. 45. Peers have ndcated not beng aware of a denal of access to MAP by the Unted Kngdom snce 1 January 2015 n case there was already an audt settlement between the taxpayer and HMRC. Antcpated modfcatons 46. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element B.5. Concluson Areas for Improvement [B.5] - Recommendatons As the Unted Kngdom has thus far granted access to the MAP n elgble cases, even f there was an audt settlement between the taxpayer and the tax authorty, t should contnue grantng access for these cases. [B.6] Provde access to MAP f requred nformaton s submtted Jursdctons should not lmt access to MAP based on the argument that nsuffcent nformaton was provded f the taxpayer has provded the requred nformaton based on the rules, gudelnes and procedures made avalable to taxpayers on access to and the use of MAP. 47. To resolve cases where there s taxaton not n accordance wth the provsons of the tax treaty t s mportant that competent authortes do not lmt access to MAP when taxpayers have compled wth the nformaton and documentaton requrements as provded n the jursdcton s gudance relatng hereto. Access to MAP wll be facltated when such requred nformaton and documentaton s made publcally avalable. Legal framework on access to MAP and nformaton to be submtted 48. The nformaton and documentaton that the Unted Kngdom requres taxpayers nclude n a request for MAP assstance are dscussed under element B.8. Practcal applcaton 49. Accordng to the Unted Kngdom t provdes access to MAP n all cases where taxpayers have compled wth the nformaton or documentaton requred by ts competent authorty and as set out n ts MAP gudance. Snce 1 January 2015 the Unted Kngdom has not lmted access to MAP on the grounds that nformaton n the MAP request was not the nformaton or documentaton requred by ts competent authorty. 50. Peers have ndcated not beng aware of a lmtaton of access to MAP by the Unted Kngdom snce 1 January 2015 n stuatons where taxpayers compled wth nformaton and documentaton requrements set out n ts MAP gudance. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

32 30 PART B - AVAILABILIT AD ACCESS T MAP Antcpated modfcatons 51. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element B.6. Concluson Areas for Improvement Recommendatons - As the Unted Kngdom has thus far not lmted access to the MAP n elgble cases when taxpayers have compled wth the Unted Kngdom s nformaton and documentaton requrements for MAP requests, t should contnue ths practce. [B.6] [B.7] Include Artcle 25(3), second sentence, of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a provson under whch competent authortes may consult together for the elmnaton of double taxaton n cases not provded for n ther tax treates. 52. For ensurng that tax treates operate effectvely and n order for competent authortes to be able to respond quckly to unantcpated stuatons, t s useful that tax treates ncludes the second sentence of Artcle 25(3) of the ECD Model Tax Conventon (ECD, 2015a), enablng them to consult together for the elmnaton of double taxaton n cases not provded for by these treates. Current stuaton of the Unted Kngdom s tax treates 53. ut of the Unted Kngdom s 129 tax treates, 80 do not contan a provson equvalent to Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a) allowng ther competent authortes to consult together for the elmnaton of double taxaton n cases not provded for n ther tax treates.5 15 of these 80 treates concern the treates mentoned n the Introducton that do not provde for a MAP artcle at all. Antcpated modfcatons 54. For those treates that do not contan a provson equvalent to Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a), the Unted Kngdom ndcated that t ntends to mplement element B.7 for all ts exstng tax treates by sgnng the Multlateral Instrument. In that regard, the Unted Kngdom envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument concernng the mutual agreement procedure for all of ts exstng tax treates to be covered by that nstrument. Furthermore, the Unted Kngdom ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, the Unted Kngdom reported that t ntends to put n place a plan to update all of ts tax treates to be complant wth element B.7, prortsng those treates where dsputes are most lkely to arse or where the defcences are most lkely to have a practcal effect. In addton, the Unted Kngdom wll seek to nclude Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a) n all of ts future treates. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

33 PART B - AVAILABILIT AD ACCESS T MAP Several peers also reported that the provsons of ther tax treaty wth the Unted Kngdom do not meet all the requrements of the relevant elements of the Acton 14 Mnmum Standard and that they envsage mplementng these elements by sgnng the Multlateral Instrument. Concluson Areas for Improvement Recommendatons 80 out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a). Where treates do not nclude the equvalent of Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. [B.7] Specfcally wth respect to the treaty wth the former USSR that s beng appled to Belarus; the treaty wth former ugoslava that s beng appled to Bosna and Herzegovna, Montenegro and Serba; and the treaty wth former Czechoslovaka that s beng appled to the Czech Republc and the Slovak Republc, the Unted Kngdom should, once t enters nto negotatons wth the jursdctons for whch t apples those treates, request the ncluson of the requred provson. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. [B.8] Publsh clear and comprehensve MAP gudance Jursdctons should publsh clear rules, gudelnes and procedures on access to and use of the MAP and nclude the specfc nformaton and documentaton that should be submtted n a taxpayer s request for MAP assstance. 56. Informaton on a jursdcton s MAP regme facltates the tmely ntaton and resoluton of MAP cases. Clear rules, gudelnes and procedures on access to and use of the MAP are essental for makng taxpayers and other stakeholders aware of how a jursdcton s MAP regme functons. In addton, to ensure that a MAP request s receved and wll be revewed by the competent authorty n a tmely manner, t s mportant that a jursdcton s MAP gudance clearly and comprehensvely explans how a taxpayer can make a MAP request and what nformaton and documentaton should be ncluded n such request. The Unted Kngdom s MAP gudance The Unted Kngdom s rules, gudelnes and procedures relatng to the MAP functon are ncluded n Statement of Practce 1/2011. Ths document sets out the avalablty and practcal applcaton of the MAP under the tax treates the Unted Kngdom entered nto and the EU Arbtraton Conventon. It also descrbes the approach of the Unted Kngdom on usng arbtraton where MAP does not lead to the elmnaton of double taxaton wthn a certan tmeframe. More specfc, the MAP gudance contans nformaton on: 57. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

34 32 PART B - AVAILABILIT AD ACCESS T MAP (a) General outlne of the MAP functon under tax treates n general and the avalablty of MAP under the tax treates the Unted Kngdom entered nto, ncludng the EU Arbtraton Conventon; (b) Performance of the competent authorty functon n the Unted Kngdom and contact nformaton of the competent authorty/offce n charge of MAP cases; (c) Intaton of the MAP by taxpayers, ncludng the manner and form n whch taxpayers should submt ther MAP request; (d) Relatonshp wth domestc avalable remedes; (e) How the MAP functons n terms of tmng, the role of the competent authortes and the rghts and role of taxpayers; (f) Tme lmts for flng of a MAP request; (g) Applcaton of ECD gudance n relaton to MAP (the ECD Transfer Prcng Gudelnes for Multnatonal Enterprses and Tax Admnstratons 2017 (ECD Transfer Prcng Gudelne, ECD 2017) for Multnatonal Enterprses and Tax Admnstratons, Report on the attrbuton of profts to permanent establshments and the Commentary to the ECD Model Tax Conventon (ECD, 2015a)); (h) Informaton on avalablty of arbtraton (ncludng the EU Arbtraton Conventon); () The process for mplementng MAP agreements, ncludng the methods of grantng relef and the rght for taxpayers to accept or reject these agreements; and (j) Avalablty of MAP to secondary adjustments. 58. The above-descrbed MAP gudance of the Unted Kngdom ncludes detaled nformaton on the avalablty and the use of the MAP and how ts competent authorty conducts the procedure n practce. Ths gudance ncludes the nformaton the FTA MAP Forum agreed should be ncluded n a jursdcton s MAP gudance, whch concerns: () contact nformaton of the competent authorty or the offce n charge of MAP cases and () the manner and form n whch the taxpayer should submt ts MAP request.6 Although ths nformaton s comprehensve, some subjects are not specfcally dscussed n the Unted Kngdom s MAP gudance. Ths concerns whether MAP s avalable n cases of () the applcaton of ant-abuse provsons, () multlateral dsputes and () bona fde foregnntated self-adjustments; (v) whether taxpayers can request for the mult-year resoluton of recurrng ssues through MAP; (v) the possblty of suspenson of tax collecton durng the course of the MAP; (v) the consderaton of nterest and penaltes and the MAP; and (v) the process how MAP agreements are mplemented n terms of steps to be taken and tmng of these steps, ncludng any actons to be taken by taxpayers (f any). Informaton and documentaton to be ncluded n a MAP request The Unted Kngdom s MAP gudance enumerates n paragraph 12 that there s no specfc requrement n what format taxpayers should submt a MAP request, other than that the request should be n wrtng and drected to the requred person. In paragraph 13 t s specfed what nformaton taxpayers as a mnmum should nclude n ther MAP request To facltate the revew of a MAP request by competent authortes and to have more consstency n the requred content of MAP requests, the FTA MAP Forum agreed on gudance that jursdctons could use n ther domestc gudance on what nformaton and MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

35 PART B - AVAILABILIT AD ACCESS T MAP 33 documentaton taxpayers need to nclude n a request for MAP assstance.7 In lght of ths lst, the requrements n the Unted Kngdom on what nformaton and documentaton should be ncluded n a MAP request are checked below: ; Identty of the taxpayer(s) covered n the MAP request; ; The bass for the request (the nature of the acton gvng rse to, or expected to gve rse to, taxaton not n accordance wth the conventon); ; Facts of the case; Analyss of the ssue(s) requested to be resolved va MAP; Whether the MAP request was also submtted to the competent authorty of the other treaty partner; Whether the MAP request was also submtted to another authorty under another nstrument that provdes for a mechansm to resolve treaty-related dsputes; Whether the ssue(s) nvolved were dealt wth prevously; and A statement confrmng that all nformaton and documentaton provded n the MAP request s accurate and that the taxpayer wll assst the competent authorty n ts resoluton of the ssue(s) presented n the MAP request by furnshng any other nformaton or documentaton requred by the competent authorty n a tmely manner. 61. The Unted Kngdom ndcated that the above lsted nformaton s the mnmum nformaton requred for consderng a MAP request. However, for a proper determnaton of the valdty of the objecton rased by the taxpayer n ts MAP request ths mnmum nformaton needs to be supplemented wth addtonal nformaton. Accordng to the Unted Kngdom the addtonal nformaton requred s normally dscussed and agreed on wth the taxpayer concerned. 62. The Unted Kngdom s MAP gudance further sets forth that specfc treates may requre certan nformaton to be provded before a case s consdered as presented for havng the deadlne for ntatng an arbtraton procedure commence. In ths regard, the Unted Kngdom has entered nto a mutual agreement wth Germany and the etherlands and a protocol wth Canada on what nformaton should be ncluded n a MAP request ne peer provded nput on element B.8. It consdered that the Unted Kngdom s MAP gudance ncludes clear and nformatve gudance on how t conducts the mutual agreement procedure. Ths peer used ths gudance when conductng MAPs wth the Unted Kngdom. In addton, taxpayers also ndcated that the gudance ssued by the Unted Kngdom s clear, partcularly the nformaton and documentaton to be ncluded n a MAP request. Antcpated modfcatons 64. The Unted Kngdom ndcated that ts MAP gudance s under revew and antcpates on updatng ths gudance n MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

36 34 PART B - AVAILABILIT AD ACCESS T MAP Concluson Areas for Improvement Recommendatons MAP gudance s comprehensve and avalable, but some further clarty could be provded. Although not requred by the Acton 14 Mnmum Standard, n order to further mprove the level of clarty of ts MAP gudance, the Unted Kngdom, when updatng ths gudance, could consder ncludng nformaton on: [B.8] o Whether MAP s avalable n cases of: () the applcaton of ant-abuse provsons, () multlateral dsputes and () bona fde foregnntated self-adjustments; o Whether taxpayers can request for the mult-year resoluton of recurrng ssues through MAP; o The possblty of suspenson of tax collecton durng the course of a MAP; o The consderaton of nterest and penaltes n the MAP; and o The process how MAP agreements are mplemented n terms of steps to be taken and tmng of these steps, ncludng any actons to be taken by taxpayers (f any). Recommendatons on gudance n relaton to audt settlements and access to MAP are dscussed n element B.10. Gudance on what nformaton taxpayers should nclude n a MAP request s avalable, but the nformaton requred s lmted. The Unted Kngdom could nclude n ts MAP gudance more nformaton on what taxpayers should nclude n a MAP request, for example the gudance the FTA MAP Forum agreed on. [B.9] Make MAP gudance avalable and easly accessble and publsh MAP profle Jursdctons should take approprate measures to make rules, gudelnes and procedures on access to and use of the MAP avalable and easly accessble to the publc and should publsh ther jursdcton MAP profles on a shared publc platform pursuant to the agreed template. 65. The publc avalablty and accessblty of a jursdcton s MAP gudance ncreases publc awareness on access to and the use of the MAP n that jursdcton. Publshng MAP profles on a shared publc platform further promotes the transparency and dssemnaton of the MAP programme.9 Rules, gudelnes and procedures on access to and use of the MAP 66. As dscussed n the Introducton, the MAP gudance of the Unted Kngdom s publshed and can be found at: As regards ts accessblty, the Unted Kngdom s MAP gudance s easly found on the government webste of the Unted Kngdom. For example, a search for double taxaton on ths webste s drected towards the relevant webpage, where the publc gudance on the MAP and arbtraton can be found. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

37 PART B - AVAILABILIT AD ACCESS T MAP 35 MAP profle 68. The MAP profle of the Unted Kngdom s publshed on the webste of the ECD.11 Ths MAP profle s complete and often wth detaled nformaton. Ths profle ncludes external lnks whch provde extra nformaton and gudance. Antcpated modfcatons 69. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element B.9. Concluson [B.9] Areas for Improvement Recommendatons - The Unted Kngdom should ensure that future updates of ts MAP gudance are made publcally avalable and easly accessble. Its MAP profle, publshed on the shared publc platform, should be updated f needed. [B.10] Clarfy n MAP gudance that audt settlements do not preclude access to MAP Jursdctons should clarfy n ther MAP gudance that audt settlements between tax authortes and taxpayers do not preclude access to MAP. If jursdctons have an admnstratve or statutory dspute settlement/resoluton process ndependent from the audt and examnaton functons and that can only be accessed through a request by the taxpayer, and jursdctons lmt access to the MAP wth respect to the matters resolved through that process, jursdctons should notfy ther treaty partners of such admnstratve or statutory processes and should expressly address the effects of those processes wth respect to the MAP n ther publc gudance on such processes and n ther publc MAP programme gudance. 70. As explaned under element B.5 an audt settlement can be valuable to taxpayers by provdng certanty to them on ther tax poston. evertheless, as double taxaton may not be fully elmnated by agreeng wth such settlements, t s mportant that a jursdcton s MAP gudance clarfes that n case of audt settlement taxpayers have access to the MAP. In addton, for provdng clarty on the relatonshp between admnstratve or statutory dspute settlement or resoluton processes and the MAP (f any), t s crtcal that both the publc gudance on such processes and the publc MAP programme gudance address the effects of those processes, f any. Fnally, as the MAP represents a collaboratve approach between treaty partners, t s helpful that treaty partners are notfed of each other s MAP programme and lmtatons thereto, partcularly n relaton to the prevous mentoned processes. MAP and audt settlements n the MAP gudance 71. As prevously dscussed under B.5, the Unted Kngdom s Internatonal Manual on transfer prcng and the mutual agreement procedure addresses that HMRC s nstructed not to agree wth taxpayers on adjustments on the condton that taxpayers wll not seek competent authorty assstance. The Unted Kngdom s MAP gudance, however, does not nclude nformaton on whether n case of an audt settlement between HMRC and taxpayers the latter are precluded access to MAP. 72. Peers ndcated not beng aware that audt settlements may preclude access to MAP n the Unted Kngdom. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

38 36 PART B - AVAILABILIT AD ACCESS T MAP MAP and other admnstratve or statutory dspute settlement/resoluton processes n avalable gudance 73. As prevously mentoned under element B.5, the Unted Kngdom does not have an admnstratve or statutory dspute settlement/resoluton process avalable. 74. Peers ndcated no ssues regardng element B.10 n relaton to admnstratve or statutory dspute settlement or resoluton processes. otfcaton of treaty partners of exstng admnstratve or statutory dspute settlement/resoluton processes 75. As the Unted Kngdom does not have an nternal admnstratve or statutory dspute settlement/ resoluton process avalable, there s no need for notfyng treaty partners of such process. Antcpated modfcatons 76. The Unted Kngdom ndcated that t envsages updatng ts MAP gudance n relaton to access to MAP n case of audt settlements. Concluson Areas for Improvement [B.10] Recommendatons MAP gudance does not nclude nformaton on the relatonshp between MAP and audt settlements, partcularly on whether enterng nto an audt settlement wll or wll not preclude access to MAP. The Unted Kngdom should ensure that t ntroduces n ts MAP gudance nformaton on the relatonshp between audt settlements and MAP, specfcally whether enterng nto an audt settlement wll or wll not preclude access to MAP. otes 1. These 50 treates nclude the treaty wth former USSR that s contnued to be appled to Belarus, the treaty wth former Czechoslovaka that s contnued to be appled to the Czech Republc and the Slovak Republc and the treaty wth former ugoslava that s contnued to beng appled to Bosna and Herzegovna, Montenegro and Serba. 2. These 75 treates nclude the treaty wth former USSR that s contnued to be appled to Belarus, the treaty wth former Czechoslovaka that s contnued to be appled to the Czech Republc and the Slovak Republc and the treaty wth former ugoslava that s contnued to beng appled to Bosna and Herzegovna, Montenegro and Serba. 3. Paragraphs of the Unted Kngdom s MAP gudance also dscusses how n practce the MAP s appled to transfer prcng cases (accessed on 10 September 2017). 5. These 80 treates nclude the treaty wth former USSR that s contnued to be appled to Belarus, the treaty wth former Czechoslovaka that s contnued to be appled to the MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

39 PART B - AVAILABILIT AD ACCESS T MAP 37 Czech Republc and the Slovak Republc and the treaty wth former ugoslava that s contnued to beng appled to Bosna and Herzegovna, Montenegro and Serba. 6. Avalable at: 7. Ibd. 8. The mutual agreement wth Germany s avalable at: (accessed on 10 September 2017). 9. The shared publc platform can be found at: The MAP gudance s reproduced n the Internatonal Manual (ITM ), whch s avalable at: (accessed on 10 September 2017). 11. Avalable at: Bblography ECD (2017), ECD Transfer Prcng Gudelnes for Multnatonal Enterprses and Tax Admnstratons 2017, ECD Publshng, Pars, ECD (2016), BEPS Acton 14 on More Effectve Dspute Resoluton Mechansms, Peer Revew Documents, (accessed on 22 August 2017). ECD (2015a), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars, ECD (2015b), Makng Dspute Resoluton Mechansms More Effectve, Acton Fnal Report, ECD Publshng, Pars, MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

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41 PART C - RESLUTI F MAP CASES 39 Part C Resoluton of MAP Cases [C.1] Include Artcle 25(2), frst sentence, of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a provson whch requres that the competent authorty who receves a MAP request from the taxpayer, shall endeavour, f the objecton from the taxpayer appears to be justfed and the competent authorty s not tself able to arrve at a satsfactory soluton, to resolve the MAP case by mutual agreement wth the competent authorty of the other Contractng Party, wth a vew to the avodance of taxaton whch s not n accordance wth the tax treaty. 77. It s of crtcal mportance that n addton to allowng taxpayers to request for a MAP, tax treates also nclude a provson the frst sentence of Artcle 25(2) of the ECD Model Tax Conventon (ECD, 2015a), whch oblges competent authortes, n stuatons where the objecton rased by taxpayers are consdered justfed and where cases cannot be unlaterally resolved, to enter nto dscussons wth each other to resolve cases of taxaton not n accordance wth the provsons of a tax treaty. Current stuaton of the Unted Kngdom s tax treates 78. ut of the Unted Kngdom s 129 tax treates, 114 contan a provson equvalent to Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) requrng ts competent authorty to endeavour when the objecton rased s consdered justfed and no unlateral soluton s possble to resolve by mutual agreement wth the competent authorty of the other treaty partner the MAP case wth a vew to the avodance of taxaton whch s not n accordance wth the tax treaty.1 The remanng 15 treates that do not nclude such provson concern the treates mentoned n the Introducton that do not provde for a MAP artcle at all. Antcpated modfcatons 79. For those treates that do not contan a provson equvalent to Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a), the Unted Kngdom ndcated that t ntends to mplement element C.1 for all ts exstng tax treates by sgnng the Multlateral Instrument. In that regard, the Unted Kngdom envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument concernng the mutual agreement procedure for all of ts exstng tax treates to be covered by that nstrument. Furthermore, the Unted Kngdom ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, the Unted Kngdom reported that t ntends to put n place a plan to update all of ts tax treates to be complant wth element C.1, prortsng those treates where dsputes are most lkely to arse or where the defcences are most lkely to MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

42 40 PART C - RESLUTI F MAP CASES have a practcal effect. In addton, the Unted Kngdom wll seek to nclude Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) n all of ts future treates. 80. Several peers also reported that the provsons of ther tax treaty wth the Unted Kngdom do not meet all the requrements of the relevant elements of the Acton 14 Mnmum Standard and that they envsage mplementng these elements by sgnng the Multlateral Instrument. Concluson Areas for Improvement Recommendatons 15 out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a). Where treates do not nclude the equvalent of Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. [C.1] [C.2] Seek to resolve MAP cases wthn a 24-month average tmeframe Jursdctons should seek to resolve MAP cases wthn an average tme frame of 24 months. Ths tme frame apples to both jursdctons (.e. the jursdcton whch receves the MAP request from the taxpayer and ts treaty partner). 81. As double taxaton creates uncertantes and leads to costs for both taxpayers and jursdctons, and as the resoluton of MAP cases may also avod (potental) smlar ssues for future years concernng the same taxpayers, t s mportant that MAP cases are resolved swftly. A perod of 24 months s consdered as an approprate tme perod to resolve MAP cases on average. Reportng of MAP statstcs 82. Statstcs regardng all tax treaty related dsputes concernng the Unted Kngdom are publshed on the webste of the ECD as of The Unted Kngdom publshes MAP statstcs regardng transfer prcng dsputes on ts government webste and transfer prcng dsputes wth EU Member States also on the webste of the EU Jont Transfer Prcng Forum The FTA MAP Forum has agreed on rules for reportng of MAP statstcs ( MAP Statstcs Reportng Framework ) for MAP requests submtted on or after 1 January 2016 ( post-2015 cases ). Also, for MAP requests submtted pror to that date ( pre-2016 cases ), the FTA MAP Forum agreed to report MAP statstcs on the bass of an agreed template. The Unted Kngdom provded ther MAP statstcs pursuant to the MAP Statstcs Reportng Framework wthn the gven deadlne, ncludng all cases nvolvng the Unted Kngdom and of whch ts competent authorty was aware. The statstcs dscussed below nclude both post-2015 and pre-2016 cases and the full statstcs are attached to ths report as Annex B and C respectvely and should be consdered jontly for an understandng of the MAP caseload of the Unted Kngdom.4 Wth respect to post-2015 cases, the Unted Kngdom reported havng reached out to all ts MAP partners wth a vew to have ther MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

43 PART C - RESLUTI F MAP CASES 41 MAP statstcs matchng. The Unted Kngdom that t could match ts statstcs wth most of ts MAP partners, but nne of them dd not respond to ts outreach. Montorng of MAP statstcs 84. The Unted Kngdom reported that t has n place to montor and manage the MAP caseload wth ts man MAP partners a mechansm. Such mechansm s not n place regardng treaty partners wth whch there s a lmted MAP caseload. Analyss of the Unted Kngdom s MAP caseload 85. The analyss of the Unted Kngdom s MAP caseload relates to the Reportng Perod startng on 1 January The followng graph shows the evoluton of the Unted Kngdom s MAP caseload over the Reportng Perod. Fgure C.1 Unted Kngdom's MAP nventory penng Inventory on 1/1/2016 Cases started Cases closed End nventory on 31/12/ At the begnnng of the Reportng Perod the Unted Kngdom had 262 pendng MAP cases, of whch 183 are attrbuton/allocaton cases and 79 other MAP cases.5 At the end of the Reportng Perod, the Unted Kngdom had 322 MAP cases n ts nventory, of whch 207 are attrbuton/allocaton cases and 115 other MAP cases. The breakdown of the end nventory can be llustrated as follows: MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

44 42 PART C - RESLUTI F MAP CASES Fgure C.2 End nventory on 31 December 2106 (322 cases) ther cases 36% Allocaton / attrbuton cases 64% 87. Durng the Reportng Perod the Unted Kngdom n total resolved 62 MAP cases for whch the followng outcomes were reported: Fgure C.3 Cases resolved durng the Reportng Perod (62 cases) 0% 0% 2% 8% dened MAP access 1% 2% 10% objecton s not justfed 5% wthdrawn by taxpayer 1% 3% unlateral relef granted 2% resolved va domestc remedy 10% agreement fully elmnatng double taxaton / fully resolvng taxaton not n accordance wth tax treaty 69% agreement partally elmnatng double taxaton / partally resolvng taxaton not n accordance wth tax treaty 3% agreement that there s no taxaton not n accordance wth tax treaty 5% no agreement ncludng agreement to dsagree 2% 69% any other outcome 8% 88. Ths chart ponts out that durng the Reportng Perod, 43 out of 62 cases were resolved through an agreement that fully elmnated double taxaton or fully resolved taxaton not n accordance wth the tax treaty. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

45 PART C - RESLUTI F MAP CASES 43 Managng of the MAP caseload Pre-2016 cases 89. At the begnnng of the Reportng Perod, the Unted Kngdom s MAP nventory of pre-2016 conssted of 262 cases, of whch were 183 attrbuton/allocaton cases and 79 other cases. At the end of the reportng perod the total nventory had decreased to 217 cases, consstng of 149 attrbuton/allocaton cases and 68 other cases. Ths decrease concerns 18% of the total pre-2016 MAP nventory, whch mostly concerned a reducton n attrbuton/allocaton cases. Post-2015 cases 90. In total 122 MAP cases were ntated on or after 1 January 2016, 62 of whch are attrbuton/allocaton cases and 60 other cases. At the end of the reportng perod the total post-2015 nventory had decreased to 105 cases, consstng of 58 attrbuton/allocaton cases and 47 other cases. Conclusvely, the Unted Kngdom resolved 17 cases, whch reflects 13.93% of the total post-2015 cases. In 16 of the 17 cases the outcome was an agreement that fully elmnated double taxaton /fully resolvng taxaton not n accordance wth the conventon and n one case t was resolved va domestc remedes. Average tmeframe needed to resolve MAP cases Pre-2016 cases 91. For pre-2016 cases the Unted Kngdom reported that on average t needed months to resolve 34 attrbuton/allocaton cases and months to resolve 11 other cases. Ths resulted n an average tme needed of months to close pre-2016 cases. For the purpose of computng the average tme needed to resolve pre-2016 cases, the Unted Kngdom used: Start date: the date when the MAP request was receved; and End date: the date the competent authortes concerned reached a formal agreement. Where competent authortes requre taxpayers to confrm ther acceptance of the agreement reached, the end date s computed as the date the competent authortes have receved ths confrmaton. Post-2015 cases 92. As a prelmnary remark, t should be noted that the perod for assessng post-2015 MAP statstcs only comprses 12 months. 93. Durng the Reportng Perod the Unted Kngdom resolved 17 cases, 4 of whch concerned attrbuton/allocaton cases and 13 of whch concerned other cases. These resolved cases represent 13.93% of new receved post-2015 cases durng the Reportng Perod. The attrbuton/allocaton cases were on average closed wthn 6.93 months, all of whch lead to an agreement that fully elmnated double taxaton or fully resolvng the taxaton not n accordance wth the provsons of the applcable tax treaty. The other MAP cases were on average closed wthn 3.52 months, wth an outcome smlar as for attrbuton/allocaton cases, except for one case that was resolved va domestc remedes. The total average for resolvng post-2015 cases s 4.32 months. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

46 44 PART C - RESLUTI F MAP CASES All cases resolved durng Reportng Perod 94. The average tme needed to resolve MAP cases durng the Reportng Perod was 21 months, whch can be broken down as follows: umber of cases Start date to End date (n months) Attrbuton / Allocaton cases ther cases All cases Peer nput 95. All peers that provded nput on the Unted Kngdom s complance wth the mnmum standard report a good workng relatonshp wth the competent authorty of the Unted Kngdom, whch s further dscussed under element C.3 below. Ths concerns both jursdctons that have a large MAP nventory wth the Unted Kngdom as also jursdctons wth a relatvely modest MAP caseload wth the Unted Kngdom. Peers reported that contacts wth the competent authorty of the Unted Kngdom are easy and that t s soluton-orented. Peers further ndcated that cases are generally resolved wthn a reasonable perod, although not all cases are resolved wthn the targeted 24-month perod, partcularly due to the nature of the case, for example relatng to the ol and gas sector. Antcpated modfcatons 96. As wll be further dscussed under element C.6, the Unted Kngdom s tax treaty polcy s to nclude a mandatory and bndng arbtraton provson n ts blateral tax treates to provde that treaty-related dsputes wll be resolved wthn a specfed tmeframe and whch should globally mprove the tme needed to settle MAP cases. Apart from that the Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element C.2. Concluson Areas for Improvement [C.2] Recommendatons The Unted Kngdom submtted tmely comprehensve MAP statstcs and ndcated they have been matched wth ther MAP partners. The year 2016 was the frst year for whch MAP statstcs were reported under the new MAP Statstcs Reportng Framework. These statstcs were only recently submtted by most jursdctons that commtted themselves to the mplementaton of the Acton 14 Mnmum Standard and some stll need to be submtted or confrmed. Gven ths state of play, t was not yet possble to assess whether the Unted Kngdom s MAP statstcs match those of ts treaty partners as reported by the latter. Wthn the context of the state of play outlned above and n relaton to the MAP statstcs provded by the Unted Kngdom, t resolved durng the Reportng Perod 13.93% (17 out of 122 cases) of ts post-2015 cases n 4.32 months on average. In that regard, the Unted Kngdom s recommended to seek to resolve the remanng 86.07% of the post-2015 cases pendng on 31 December 2016 (105 cases) wthn a tmeframe that results n an average tmeframe of 24 months for all post-2015 cases. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

47 PART C - RESLUTI F MAP CASES 45 [C.3] Provde adequate resources to the MAP functon Jursdctons should ensure that adequate resources are provded to the MAP functon. 97. Adequate resources, ncludng personnel, fundng and tranng, are necessary to properly perform the competent authorty functon and to ensure that MAP cases are resolved n a tmely, effcent and effectve manner. Descrpton of the Unted Kngdom s competent authorty 98. As descrbed n the Introducton, the Unted Kngdom s MAP functon s performed by Commssoners for HMRC or ther authorsed representatves. Dfferent teams are responsble for handlng MAP cases.6 These are: 99. Transfer prcng and proft attrbuton to permanent establshments: CTIS Busness Internatonal TP Team; Corporate resdence and wthholdng tax: CTIS Busness Internatonal Foregn Profts Team; and Personal tax. The functonng of each team can be explaned as follows: Team Descrpton Transfer prcng and proft attrbuton to permanent establshments Ths team s responsble for handlng MAP cases concernng transfer prcng and proft attrbuton to permanent establshments and conssts of approxmately 30 people wthn HMRC, of whch four provde support functons. ext to conductng mutual agreement procedures ths team also handles APA requests. People workng n the team are not fully dedcated to handlng MAP cases. ther actvtes nclude: () developng and mantanng polcy relatng to transfer prcng and proft attrbuton to permanent establshments, () conductng polcy and governance of the dverted proft tax, () mantanng polcy for offshore property developers tax, (v) provdng advce tranng to nternatonal specalsts that hold responsbltes for transfer prcng enqures at the level of taxpayers and (v) partcpatng n the work of the ECD and the EU as well as contrbutng to the ECD outreach programmes. Corporate resdence and wthholdng tax The corporate resdence and wthholdng tax team conssts of eght people, whch generally holds responsblty for developng and mantanng polcy regardng corporate resdence and overseas wthholdng taxes, as also renderng advce to nternatonal specalsts that handle corporate resdence questons and requests for relef of wthholdng taxes. Two persons of ths team are responsble for handlng MAP cases relatng to corporate resdence and wthholdng taxes. Personal taxes In total four people work n ths team. ext to handlng MAP cases relatng to ndvduals, the team also holds responsblty for development and mantanng polcy regardng double taxaton of ndvduals. They also provde advce on the operaton of legslaton (e.g. advsng audt and provdng practcal evdence of the operaton of the rules to polcy) to nternatonal specalsts dealng wth questons on the taxaton of non-uk resdents recevng source ncome from the Unted Kngdom or UK-resdents recevng foregn source ncome ext to these three teams, the Unted Kngdom also has a team that holds responsblty for handlng MAP cases relatng to the general nterpretaton or applcaton of tax treaty provsons. Ths team employs 13 people and operates n the tax treaty negotaton dvson of HMRC. Ths team s also responsble for mantanng polcy MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

48 46 PART C - RESLUTI F MAP CASES regardng tax treates, renderng advce and provdng tranng on tax treates, contrbutng to the ECD outreach programmes and partcpatng n the work of the ECD and the EU Personnel workng n the Unted Kngdom competent authorty generally have long experence n dealng wth nternatonal tax ssues. For example, becomng a member of the team that deals wth transfer prcng ssues requres a proven record of experence wth ths subject, such as beng an audtor. Furthermore, also persons that have less experence wth nternatonal tax ssues can work n the competent authorty and these persons all follow an nternal tranng program. In addton, new personnel are supervsed and traned by experenced colleagues wthn the Unted Kngdom competent authorty In terms of fundng of ts competent authorty, other than staff n charge of MAP, the Unted Kngdom reported that there s suffcent budget avalable for travellng and conductng face-to-face meetngs. Montorng mechansm 103. The Unted Kngdom reported that ts competent authorty montors the MAP caseload, whch s an element n requestng for addtonal resources. Allocatng budget to the competent authorty functon, however, s a matter of polcy and provdng more resources to the MAP functon s not a matter to be decded by the Unted Kngdom s competent authorty. Practcal applcaton General 104. The Unted Kngdom has entered nto a competent authorty arrangement wth the Unted States specfcally relatng to the mutual agreement procedure.7 Ths arrangement set out certan prncples and practces to be followed n presentng and dscussng MAP cases. MAP statstcs 105. As dscussed under element C.2, the Unted Kngdom resolved ts MAP cases durng the Reportng Perod wthn the pursued 24-month average. However, a dscrepancy exsts between the average tme taken to solve attrbuton / allocaton cases and other cases. Ths can be llustrated by the followng graph: MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

49 PART C - RESLUTI F MAP CASES 47 Fgure C.4 Average tme (n months) ther cases Pre-2016 cases Post-2015 cases (*) All cases Attrbuton / Allocaton cases All cases (*) ote that post-2015 cases only concern cases opened and closed durng Based on these fgures, t follows that on average t took the Unted Kngdom months to resolve MAP cases. However, t took the Unted Kngdom months to resolve attrbuton / allocaton cases, whch may ndcate that addtonal resources specfcally dedcated to these cases may be necessary to accelerate ther resoluton. Peer and taxpayer nput 107. As mentoned under element C.2, all peers that provded nput on the Unted Kngdom s complance wth the Acton 14 Mnmum Standard report a good workng relatonshp wth ts competent authorty. Ths concerns both peers that have a large MAP nventory wth the Unted Kngdom as also peers wth a relatvely modest MAP caseload wth the Unted Kngdom. Furthermore, all peers ndcated that the contacts wth the Unted Kngdom s competent authorty are frequent and va dfferent channels, such as wrtten correspondence, telephone and e-mal. Its competent authorty s consdered easly accessble and no problems were reported as regards contactng the Unted Kngdom s competent authorty. Generally, all avalable methods of communcaton are used to resolve MAP cases and the Unted Kngdom s competent authorty s responsve to communcaton. Two peers partcularly noted that t s easy to dentfy the offcers responsble for handlng MAP cases and to fnd ther contact detals. In ths regard t s noted that the Unted Kngdom s competent authorty perodcally provdes contact detals to the competent authortes of ts treaty partners. The relevant contact detals are also made avalable n the Unted Kngdom s MAP gudance and on ts general government webste n the materal sde of handlng MAP cases, all peers reported that the Unted Kngdom s competent authorty s cooperatve, constructve and soluton-orented, and also has the ntent to resolve cases n a tmely, effectve and prncpled manner. Ths even when from a formal or materal perspectve dfferences of vews exst on how to resolve a MAP case. Two peers partcularly noted that t consders that the Unted Kngdom has deployed adequate resources to the MAP functon, although one peer experenced a postponement of a competent authorty meetng due to budget constrants. The Unted Kngdom responded to ths nput and mentoned that such meetng was not cancelled due to budget constrants. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

50 48 PART C - RESLUTI F MAP CASES The Unted Kngdom reported that ts competent authorty organses at regular occasons face-to-face meetngs wth other competent authortes for settlng dsputes. The frequency of these meetngs s dependent on the MAP caseload wth the relevant treaty partner. Apart from that specfc crteron, there appears not to be a dfferent atttude towards handlng MAP cases for dfferent treaty partners n relaton to organsng face-to-face meetngs Furthermore, one peer ndcated that the personnel dealng wth MAP n the Unted Kngdom s well-traned to handle MAP cases. It was also reported that the Unted Kngdom s wllng to dscuss cases under the equvalent of Artcle 25(3) of the ECD Model Tax Conventon (ECD, 2015a) to solve dsputes of a general nature or to avod dsputes from arsng. Another postve element mentoned by peers s that HMRC s (domestcally) promotng the use of alternatve dspute resoluton mechansms, such as medaton, to acheve that there s a better understandng between taxpayers and HMRC durng the audt process. Ths peer noted that such practce may also be helpful to avod dsputes from arsng Peers generally reported no tems for mprovement regardng provdng adequate resources for the MAP functon. ne peer, however, suggested that there could be an ncreased communcaton on the state of play of the MAP caseload generally to enhance the ablty of the competent authortes to montor and manage ther MAP caseload. Another peer suggested that for non-attrbuton/allocaton cases t may be helpful to utlse electronc means of communcaton, nstead of wrtten communcaton n the form of letters, for more routnely types of communcaton such as notfcatons. Ths peer also suggested that tme frames for some cases could be more closely montored and controlled. In relaton to avalable resources n the Unted Kngdom s competent authorty, ths peer n addton suggested to keep as much as stablty n the key staff, as there n ths peer s vew appears to be a frequent movement of personnel, whch may n some cases cause delay Taxpayers reported that the Unted Kngdom encouraged them to partcpate n the process, such as substantatng postons wth facts and fgures as well as provdng vews on how the case should be resolved.9 Taxpayers also reported that the Unted Kngdom promotes open relatonshps wth them pror to and durng the MAP process. Smlarly to peers taxpayers also noted that resources n the Unted Kngdom are generally adequate to perform the MAP functon. Antcpated modfcatons 112. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element C.3. Concluson [C.3] Areas for Improvement Recommendatons - The Unted Kngdom should contnue to closely montor whether t has adequate resources n place to ensure that future MAP cases are resolved n a tmely, effcent and effectve manner. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

51 PART C - RESLUTI F MAP CASES 49 [C.4] Ensure staff n charge of MAP has the authorty to resolve cases n accordance wth the applcable tax treaty Jursdctons should ensure that the staff n charge of MAP processes have the authorty to resolve MAP cases n accordance wth the terms of the applcable tax treaty, n partcular wthout beng dependent on the approval or the drecton of the tax admnstraton personnel who made the adjustments at ssue or beng nfluenced by consderatons of the polcy that the jursdctons would lke to see reflected n future amendments to the treaty Ensurng that staff n charge of MAP can and wll resolve cases, absent of any approval/drecton by the tax admnstraton personnel drectly nvolved n the adjustment at ssue and of any polcy consderaton, contrbutes to a prncpled and consstent approach to MAP cases. Functonng of staff n charge of MAP 114. Followng the descrpton ncluded n paragraph 99 on the organsaton and tasks of the teams that wthn HMRC are responsble for handlng MAP cases, the operaton of these teams specfcally relatng to MAP s as follows: Assgnment of MAP cases to staff In the Unted Kngdom a MAP request s assgned to a member of the relevant team, dependng on the tems ncluded n the request. For straghtforward cases, MAP cases can be handled by a member of the team that s not a delegated competent authorty, but ths s always under the supervson of the delegated competent authorty. More complex cases are always handled only by the delegated competent authorty, possbly wth support from other team members. Handlng of MAP cases If the MAP request s to be dealt wth n the blateral phase of the mutual agreement procedure, t s only the delegated competent authorty that holds responsblty for preparng and exchangng poston papers as well as engagng n negotatons wth the other nvolved competent authorty for reachng an agreement. Resoluton of MAP cases The manner n whch negotated MAP agreements are authorsed devates per the specfc team handlng MAP cases. Ths concerns: a) Transfer prcng and proft attrbuton to permanent establshments All potental MAP agreements reached are referred to a second person for authorsaton, based on a summary of the case and a settlement proposal. b) Corporate resdence and wthholdng tax Persons handlng MAP cases, not specfcally the delegated competent authorty, have autonomy to enter nto MAP agreements. The head of ths team s the delegated competent authorty, whch for larger/complex cases authorses MAP agreements and s nformed on other MAP agreements that concern straghtforward/less complex cases. c) Personal taxes Straghtforward cases may be handled by members of the team, not specfcally the delegated competent authorty. However, any MAP agreement reached s only negotated and agreed by the delegated competent authorty. ther team members may assst the delegated competent authorty, but the latter always make the decson on enterng nto MAP agreements. For more complex cases addtonal governance rules are ntroduced. The delegated competent authorty assgns these cases to a senor colleague workng n the team, whch holds responsblty to ensure consstency n handlng MAP cases that concern cases relatng to ndvduals. Also here t s the delegated competent authorty that negotates cases and enters nto MAP agreements In the Unted Kngdom there s no legal framework or gudance on the functonng of ts competent authorty. Ths functonng drectly follows from tax treates that assgn MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

52 50 PART C - RESLUTI F MAP CASES competence to the competent authorty for handlng MAP cases. The analyss of element C.3 ponts out that personnel that are the desgnated competent authorty are part of teams that, next to handlng MAP cases and requests for APAs, also are responsble for developng and mantanng polcy relatng to nternatonal tax ssues In practce, the competent authorty n the Unted Kngdom operates ndependently and has full authorty to resolve MAP cases. There s nether a (formal) system n place requrng the competent authorty to ask tax admnstraton personnel drectly nvolved n the adjustment at ssue for approval of any MAP agreements nor s the process for negotatng MAP agreements nfluenced by polcy consderatons. All three teams responsble for handlng MAP cases have a proper system n place to authorse negotated MAP agreements, whch facltates a consstent and prncpled resoluton of MAP cases. Practcal applcaton 117. Peers generally reported no mpedments by the Unted Kngdom to perform ts MAP functon absent from approval or the drecton of the tax admnstraton personnel who made the adjustments at ssue or beng nfluenced by consderatons of the polcy. Two peers specfcally mentoned that they are not beng aware that staff n charge of the MAP n the Unted Kngdom s dependent on the approval of the tax authortes of MAP agreements. In addton, taxpayers reported that they consder the staff n charge of the MAP n the Unted Kngdom as beng empowered to make decsons and to functon ndependently. Antcpated modfcatons 118. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element C.4. Concluson [C.4] Areas for Improvement Recommendatons - As t has done thus far, the Unted Kngdom should contnue to ensure that ts competent authorty has the authorty, and uses that authorty n practce, to resolve MAP cases wthout beng dependent on approval or drecton from the tax admnstraton personnel drectly nvolved n the adjustments at ssue.- [C.5] Use approprate performance ndcators for the MAP functon Jursdctons should not use performance ndcators for ther competent authorty functons and staff n charge of MAP processes based on the amount of sustaned audt adjustments or mantanng tax revenue For ensurng that each case s consdered on ts ndvdual merts and wll be resolved n a prncpled and consstent manner, t s essental that any performance ndcators for the competent authorty functon and for the staff n charge of MAP processes are approprate and not based on the amount of sustaned audt adjustments or am at mantanng a certan amount of tax revenue. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

53 PART C - RESLUTI F MAP CASES 51 Performance ndcators used by the Unted Kngdom 120. The Unted Kngdom evaluates the performance of staff n charge of MAP processes by nter ala settng quanttatve targets. These concern the tme taken by personnel to draw up poston papers and respond to request made by taxpayers and treaty partners. In addton, the performance of staff n charge of MAP process s also evaluated through an analyss of the qualty of the work undertaken, such as buldng relatonshps wthn the competent authorty and wth other competent authortes, as also whether the arm s length prncple was mantaned n a MAP agreement (n prncple, not n amount) The Acton 14 fnal report (ECD, 2015b) ncludes examples for performance ndcators that are consdered approprate. These ndcators are shown below and the tems that are used by the Unted Kngdom are checked n the followng boxes: ; umber of MAP cases resolved; ; Consstency (.e. a treaty should be appled n a prncpled and consstent manner to MAP cases nvolvng the same facts and smlarly-stuated taxpayers); and ; Tme taken to resolve a MAP case (recognsng that the tme taken to resolve a MAP case may vary accordng to ts complexty and that matters not under the control of a competent authorty may have a sgnfcant mpact on the tme needed to resolve a case) In the Unted Kngdom there are no performance ndcators that are related to the outcome of MAP dscussons n terms of the amount of sustaned audt adjustments or mantanng tax revenue. In other words, n the Unted Kngdom the specfc materal outcome of MAP dscussons s not a crteron to evaluate performance of staff n charge of MAP. In addton, the Unted Kngdom does not have a system n place whereby the remuneraton of staff n charge of MAP s based on the (jont) performance of ths staff. It montors the average tme for resolvng MAP cases, whereby the Unted Kngdom also montors for whch cases adjustments by another jursdcton were accepted or rejected and for whch cases adjustments mposed by the Unted Kngdom were mantaned or wthdrawn as the outcome of MAP dscussons. Ths montorng, however, s not an element n evaluatng the performance of staff n charge of MAP. Practcal applcaton 123. Peers generally provded no specfc nput relatng to ths element of the mnmum standard. Two peers partcularly noted that they are not aware of the use of performance ndcators n the Unted Kngdom that are based on the amount of sustaned audt adjustments or mantanng a certan amount of tax revenue. As dscussed under element C.3, all peers reported that the Unted Kngdom s competent authorty s cooperatve, constructve and soluton-orented and also has the ntent to resolve cases n a tmely, effectve and prncpled manner. Antcpated modfcatons 124. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element C.5. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

54 52 PART C - RESLUTI F MAP CASES Concluson Areas for Improvement [C.5] - Recommendatons As t has done thus far, the Unted Kngdom should contnue to use approprate performance ndcators. [C.6] Provde transparency wth respect to the poston on MAP arbtraton Jursdctons should provde transparency wth respect to ther postons on MAP arbtraton The ncluson of an arbtraton provson n tax treates may help ensure that MAP cases are resolved wthn a certan tmeframe, whch provdes certanty to both taxpayers and competent authortes. In order to have full clarty on whether arbtraton as a fnal stage n the MAP process can and wll be avalable n jursdctons t s mportant that jursdctons are transparent on ther poston on MAP arbtraton. Poston on MAP arbtraton 126. The Unted Kngdom has no domestc law lmtatons for ncludng MAP arbtraton n ts tax treates. The ncluson of MAP arbtraton s part of ts tax treaty polcy.10 In addton, the Unted Kngdom s a sgnatory to the EU Arbtraton Conventon and has been a partcpant n the sub-group on arbtraton as part of the group whch negotated the Multlateral Instrument. Its MAP gudance specfes the avalablty of arbtraton under tax treates. Practcal applcaton 127. Up to date, the Unted Kngdom has ncorporated an arbtraton clause n 21 tax treates as a fnal stage to the MAP. In 20 treates ths concerns an equvalent of Artcle 25(5) of the ECD Model Tax Conventon (ECD, 2015a), whereby n some treates devatons from ths provson were agreed (.e. a three-year perod for the MAP nstead of a two-year perod). In ths respect, the Unted Kngdom entered nto an exchange of notes wth Canada and a competent authorty agreement wth Germany and the etherlands to detal the rules to be appled durng the arbtraton procedure.11 The remanng treaty provdes for a voluntary and bndng arbtraton procedure. Antcpated modfcatons 128. The Unted Kngdom has reported that t wll opt for part VI of the Multlateral Instrument, whch ncludes a mandatory and bndng arbtraton provson. Concluson [C.6] Areas for Improvement Recommendatons - - MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

55 PART C - RESLUTI F MAP CASES 53 otes 1. These 114 treates nclude the treaty wth former USSR that s contnued to be appled to Belarus, the treaty wth former Czechoslovaka that s contnued to be appled to the Czech Republc and the Slovak Republc and the treaty wth former ugoslava that s contnued to beng appled to Bosna and Herzegovna, Montenegro and Serba. 2. Avalable at: These statstcs are up to and nclude fscal year Avalable at (accessed on 10 September 2017) and (accessed on 10 September 2017). The statstcs made avalable on the webste of the Unted Kngdom are for fscal years 2013 and The statstcs made avalable on the webste of the EU Jont Transfer Prcng forum are up to and nclude fscal year For post-2015 cases, f the number of MAP cases n the Unted States nventory at the begnnng of the Reportng Perod plus the number of MAP cases started durng the Reportng Perod was more than fve, Unted States reports ts MAP caseload on a jursdcton-by-jursdcton bass. Ths rule apples for each type of cases (attrbuton / allocaton cases and other cases). 5. The Unted Kngdom reported that for pre-2016 and post-2015 cases t follows the MAP Statstcs Reportng Framework for determnng whether a case s consdered an attrbuton/allocaton MAP case. Annex D of MAP Statstcs Reportng Framework defnes such case as: a MAP case where the taxpayer s MAP request relates to () the attrbuton of profts to a permanent establshment (see e.g. Artcle 7 of the ECD Model Tax Conventon); or () the determnaton of profts between assocated enterprses (see e.g. Artcle 9 of the ECD Model Tax Conventon), whch s also known as a transfer prcng MAP case. 6. Reference s made to paragraph 9 of the Unted Kngdom s MAP gudance for a further descrpton hereof. 7. See Admnstratve Arrangements for the Implementaton of the Mutual Agreement Procedure (Artcle 25) of the Conventon Between the Government of the Unted Kngdom of Great Brtan and orthern Ireland and the Government of the Unted States of Amerca for the Avodance of Double Taxaton and the Preventon of Fscal Evason wth Respect to Taxes on Income and Captal Gans (Sgned on December 31, 1975, as Amended by Protocols). Avalable at: (accessed on 10 September 2017). 8. Avalable at: (accessed on 10 September 2017). 9. In paragraph 8 of ts MAP gudance the Unted Kngdom sets out the role of taxpayers n the MAP process. The competent authorty of the Unted Kngdom nformally allows taxpayers to partcpate n the process, whch, however, s dependent on whether the other competent authorty nvolved agrees herewth. See specfcally for transfer prcng cases paragraph 18 of the Unted Kngdom s MAP gudance. 10. See n ths regard paragraph 33 of the Unted Kngdom s MAP gudance. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

56 54 PART C - RESLUTI F MAP CASES 11. The mutual agreement wth Germany s avalable at: (accessed on 10 September 2017). Bblography ECD (2016), BEPS Acton 14 on More Effectve Dspute Resoluton Mechansms, Peer Revew Documents, (accessed on 22 August 2017). ECD (2015a), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars, ECD (2015b), Makng Dspute Resoluton Mechansms More Effectve, Acton Fnal Report, ECD Publshng, Pars. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

57 PART D - IMPLEMETATI F MAP AGREEMETS 55 Part D Implementaton of MAP Agreements [D.1] Implement all MAP agreements Jursdctons should mplement any agreement reached n MAP dscussons, ncludng by makng approprate adjustments to the tax assessed n transfer prcng cases In order to provde full certanty to taxpayers and the jursdctons, t s essental that all MAP agreements are mplemented by the competent authortes concerned. Legal framework to mplement MAP agreements 130. Under the requrements that the below descrbed condtons are met, all MAP agreements reached are mplemented n the Unted Kngdom notwthstandng domestc statute of lmtatons The Unted Kngdom s competent authorty nforms taxpayers of a MAP agreement reached, whereby taxpayers are to decde to ether reject or to accept ths agreement. In cases where the MAP agreement s rejected taxpayers are at lberty to pursue domestc remedes f stll avalable. If taxpayers accept the agreement reached, they have to fle a clam for relef of double taxaton. Ths apples both for agreements reached as the result of the MAP, as also for any agreements reached followng the decson of an arbtraton panel as a fnal stage to the MAP Pursuant to secton 124 of the Tax Internatonal and ther Provsons Act 2010 (TIPA 2010) the Unted Kngdom waves domestc tme lmts f a case s dealt wth n a MAP. Ths waver allows the actual mplementaton of MAP agreements once reached and prevents domestc tme lmts from mpedng the mplementaton of such agreements. In straghtforward cases, where the mplementaton of a MAP agreement only requres the deducton of taxable ncome or the ncrease of losses carred-forward, no further acton by taxpayers s necessary for the MAP agreement to be mplemented, once accepted by them. For non-straghtforward cases, the Unted Kngdom s domestc legslaton requres taxpayers to make a clam for relef followng a MAP agreement wthn a perod of 12 months as from the date that agreement s notfed to them. The Unted Kngdom explaned that ths requrement s nter ala put n place because of ts system of offsettng losses and group-relef. For example, where a taxpayers prefers to have losses to be carred-back to profts of prevous fscal years or prefers that such losses are under the system of grouprelef offset aganst profts of another group company, secton 124(4) of TIPA 2010 replaces domestc avalable tme lmts for makng clams for relef and subsequently requres taxpayers to make such clam wthn 12 months as from the date of notfcaton of the MAP agreement. Ths system ensures that taxpayers have the avalablty to nform the Unted Kngdom s competent authorty on how they prefer to have losses to be offset or to what entty wth the group company losses should be allocated. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

58 56 PART D - IMPLEMETATI F MAP AGREEMETS 133. For agreements reached under the EU Arbtraton Conventon the system for mplementng MAP agreements s slghtly dfferent, as domestc tme lmts for grantng relef of double taxatons do not apply. In other words, agreements reached under the EU Arbtraton Conventon are upon acceptance by taxpayers always mplemented wthout requrng taxpayers to submt a request for relef wthn a certan tmeframe. Ths s specfed n secton 127(5) of TIPA 2010, whch stpulates: An enactment whch mposes deadlnes for the makng of clams for relef under any provson of the Tax Acts does not apply to a clam made n pursuance of a Conventon determnaton The Unted Kngdom reported that t montors the actual mplementaton of all MAP agreements. For MAP cases that concern large multnatonal enterprses, a customer relatonshp manager of HMRC montors the mplementaton of MAP agreements. For small multnatonal enterprses, the mplementaton of MAP agreements s performed by a processng offcer wthn HMRC. As these offcers may have lttle experence wth MAP agreements, the Unted Kngdom s competent authorty provdes advce and assstance to the offcers responsble for mplementng MAP agreements. Ths to ensure that MAP agreements are effectvely mplemented. In relaton hereto, the Unted Kngdom has establshed a central pont of contact Paragraph 51 of the Unted Kngdom s MAP gudance further detals how relef from double taxaton s granted n practce. Ths s dependent on the facts and crcumstances of each ndvdual case, but ths s ether by allowng a deducton aganst the taxable proft or by grantng a tax credt. If a MAP agreement s reached and accepted by the taxpayer, t s nvted by the Unted Kngdom s competent authorty to submt a revsed computaton of the taxable ncome that reflects the agreed relef. Paragraph 52 of the MAP gudance specfcally addresses that the sole possblty to obtan relef from double taxaton s through the MAP. Taxpayers are, ether through a self-assessment or followng a foregnntated adjustment, not allowed to adjust ther taxable ncome n ther tax returns so as to obtan relef from double taxaton. Practcal applcaton 136. The Unted Kngdom reported that 17 MAP agreements have not been mplemented snce 1 January Ths concerns 14 agreements reached n 2015 and 3 n Reasons for not mplementng were because taxpayers ether dd not request for relef wthn the requred 12 months or dd not accept the agreement In general peers and taxpayers have not ndcated experencng any problems wth the Unted Kngdom regardng the mplementaton of MAP agreements reached on or after 1 January ne peer noted that n ts jursdcton the competent authorty requres the taxpayer s acceptance of a MAP agreement as a prerequste for mplementaton (along wth wavng domestc appeals procedures), for whch a parallel process appeared not to be applcable n the Unted Kngdom. In ts cases wth the Unted Kngdom ths caused problems/delays regardng mplementaton of MAP agreements. As descrbed above, the Unted Kngdom, however, has n place a procedure whereby mplementaton of MAP agreements s dependent on the taxpayer s flng of a clam, whch would show ts acceptance of such agreement. Antcpated modfcatons 138. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element D.1. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

59 PART D - IMPLEMETATI F MAP AGREEMETS 57 Concluson Areas for Improvement [D.1] - Recommendatons As t has done thus far, the Unted Kngdom should contnue to mplement all MAP agreements f the condtons for such mplementaton are fulflled. [D.2] Implement all MAP agreements on a tmely bass Agreements reached by competent authortes through the MAP process should be mplemented on a tmely bass Delay of mplementaton of MAP agreements may lead to adverse fnancal consequences for both taxpayers and competent authortes. To avod ths and to ncrease certanty for all partes nvolved, t s mportant that the mplementaton of any MAP agreement s not obstructed by procedural and/or statutory delays n the jursdctons concerned. Theoretcal tmeframe for mplementng mutual agreements 140. The Unted Kngdom has n ts domestc legslaton and/or admnstratve framework no tmeframe for mplementaton of mutual agreements reached. Ths regards both the stuaton n whch the MAP agreement leads to addtonal tax to be pad or to a refund of tax n the Unted Kngdom. Furthermore, ts MAP gudance does not nclude nformaton on the tmeframe for mplementng MAP agreements. Practcal applcaton 141. Peers have not ndcated experencng any problems wth the Unted Kngdom regardng the mplementaton of MAP agreements reached on or after 1 January 2015 n general or not on a tmely bass. ne peer reported that to ts knowledge all MAP agreements wth the Unted Kngdom have been mplemented correctly and tmely. However, ths peer also reported that n one MAP case the agreement reached s stll to be mplemented, despte the fact that the agreement was reached a year ago. The reason cted for ths delay s that the taxpayer concerned s n doubt on the tax mplcatons of the MAP agreement to the tax poston of ts permanent establshment. ther dffcultes were not reported, but n the partcular case t was not due to (n)actons by the competent authorty of the Unted Kngdom that the MAP agreement was not mplemented on a tmely bass. Antcpated modfcatons 142. The Unted Kngdom dd not ndcate that t antcpates any modfcatons n relaton to element D.2. Concluson [D.2] Areas for Improvement Recommendatons - As t has done thus far, the Unted Kngdom should contnue to mplement all MAP agreements on a tmely bass f the condtons for such mplementaton are fulflled. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

60 58 PART D - IMPLEMETATI F MAP AGREEMETS [D.3] Include Artcle 25(2), second sentence, of the ECD Model Tax Conventon n tax treates or alternatve provsons n Artcle 9(1) and Artcle 7(2) Jursdctons should ether () provde n ther tax treates that any mutual agreement reached through MAP shall be mplemented notwthstandng any tme lmts n ther domestc law, or () be wllng to accept alternatve treaty provsons that lmt the tme durng whch a Contractng Party may make an adjustment pursuant to Artcle 9(1) or Artcle 7(2), n order to avod late adjustments wth respect to whch MAP relef wll not be avalable In order to provde full certanty to taxpayers t s essental that mplementaton of MAP agreements s not obstructed by any tme lmts n the domestc law of the jursdctons concerned. Such certanty can be provded by ether ncludng the equvalent of Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) n tax treates, or alternatvely, settng a tme lmt n Artcle 9(1) and Artcle 7(2) for makng adjustments to avod that late adjustments obstruct grantng of MAP relef. Legal framework and current stuaton of the Unted Kngdom s tax treates 144. As dscussed under element D.1, the Unted Kngdom s domestc legslaton does not nclude a statute of lmtatons for mplementng MAP agreements ut of the Unted Kngdom s 129 tax treates, 26 contan a provson that s equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) that any mutual agreement reached through MAP shall be mplemented notwthstandng any tme lmts n ther domestc law. For the remanng 103 treates, the followng analyss s made: In 84 tax treates no equvalent provson to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) s ncluded.1 These 84 treates nclude the 15 treates mentoned n the Introducton that do not provde for a MAP artcle. Further, none of these 84 tax treates the Unted Kngdom nclude the equvalent to Artcle 9(1) and Artcle 7(2), settng a tme lmt for makng adjustments; and 19 tax treates an equvalent provson to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) s ncluded, but ths provson s supplemented wth wordng that may lmt the mplementaton of MAP agreements due to constrants n the domestc legslaton of the contractng states (e.g. except such lmtatons as apply for the purposes of gvng effect to such an agreement ). Although the Unted Kngdom uses no statute of lmtatons for mplementng MAP agreements, such statute of lmtaton may be n exstence n the domestc legslaton of the treaty partner. These 19 treates therefore are consdered not havng the full equvalent of Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015). Antcpated modfcatons 146. For those treates that do not contan a provson equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015), the Unted Kngdom ndcated that t ntends to mplement element D.3 for all ts exstng tax treates by sgnng the Multlateral Instrument. In that regard, the Unted Kngdom envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument concernng the mutual agreement procedure for all of ts exstng tax treates to be covered MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

61 PART D - IMPLEMETATI F MAP AGREEMETS 59 by that nstrument. Furthermore, the Unted Kngdom ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, the Unted Kngdom reported that t ntends to put n place a plan to update all of ts tax treates to be complant wth element D.3, prortsng those treates where dsputes are most lkely to arse or where the defcences are most lkely to have a practcal effect. In addton, the Unted Kngdom wll seek to nclude Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) n all of ts future treates Several peers also reported that the provsons of ther tax treaty wth the Unted Kngdom do not meet all the requrements of the relevant elements of the Acton 14 Mnmum Standard and that they envsage mplementng these elements by sgnng the Multlateral Instrument. Concluson Areas for Improvement 103 out of 129 tax treates contan nether a provson that s equvalent to Artcle 25(2), second sentence of the ECD Model Tax Conventon (ECD, 2015), nor the alternatve provsons n Artcle 9(1) and Artcle 7(2). f those 103 tax treates: [D.3] o 84 contan nether a provson that s equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) nor nclude the alternatve provsons; and o 19 nclude a provson that s equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015), but are supplemented wth wordng that may lmt the mplementaton of MAP agreements due to constrants n the domestc legslaton of the contractng states. Recommendatons Where treates do not nclude the equvalent of Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015), or the alternatves provded n Artcle 9(1) and Artcle 7(2), and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson or be wllng to accept the ncluson of both alternatve provsons. Specfcally wth respect to the treaty wth the former USSR that s beng appled to Belarus; the treaty wth former ugoslava that s beng appled to Bosna and Herzegovna, Montenegro and Serba; and the treaty wth former Czechoslovaka that s beng appled to the Czech Republc and the Slovak Republc, the Unted Kngdom should, once t enters nto negotatons wth the jursdctons for whch t apples those treates, request the ncluson of the requred provson or ts alternatves. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson, or be wllng to accept the ncluson of both alternatve provsons, n all future treates. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

62 60 PART D - IMPLEMETATI F MAP AGREEMETS otes 1. These 84 treates nclude the treaty wth former USSR that s contnued to be appled to Belarus, the treaty wth former Czechoslovaka that s contnued to be appled to the Czech Republc and the Slovak Republc and the treaty wth former ugoslava that s contnued to beng appled to Bosna and Herzegovna, Montenegro and Serba. Bblography ECD (2015), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars, MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

63 SUMMAR 61 Summary Areas for Improvement Recommendatons Part A: Preventng dsputes [A.1] [A.2] 15 out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015). Where treates do not nclude the equvalent of Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. The Unted Kngdom should contnue to provde for roll-back of blateral APAs n approprate cases as t has done thus far. To keep track of the number of APAs where a roll-back was and was not granted, the Unted Kngdom could ntroduce a trackng system. - Part B: Avalablty and access to MAP 17 out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015). f those 16 tax treates: o [B.1] o 16 do not contan a provson that s the equvalent of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015), ether as t read pror to the adopton of the fnal report on Acton 14 or as amended by that fnal report; and ne does not contan a provson based on Artcle 25(1), second sentence of the ECD Model Tax Conventon (ECD, 2015), allowng taxpayers to submt a MAP request wthn a perod of no less than three years as from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. Where treates do not nclude the equvalent of Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. Ths concerns both: o a provson that s equvalent to Artcle 25(1), frst sentence of the ECD Model Tax Conventon (ECD, 2015) ether: a) b) o As amended n the Acton 14 fnal report (ECD, 2015); or As t read pror to the adopton of Acton 14 fnal report (ECD, 2015), thereby ncludng the full sentence of such provson; and a provson that allows taxpayers to submt a MAP request wthn a perod of no less than three years as from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. [B.2] The Unted Kngdom has n place a process to notfy and/or consult the other competent authorty n cases ts competent authorty consdered the objecton rased n a MAP request as not justfed. Because for the perod under revew no such cases have occurred, t was not possble to assess whether the notfcaton and/or consultaton process s appled n practce. [B.3] - As the Unted Kngdom has thus far granted access to the MAP n elgble transfer prcng cases, t should contnue grantng access for these cases. [B.4] - As the Unted Kngdom has thus far granted access to the MAP n elgble cases concernng whether the condtons for the applcaton of a treaty ant-abuse provson have been met or whether the applcaton of a MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

64 62 SUMMAR domestc law ant-abuse provson s n conflct wth the provsons of a treaty, t should contnue grantng access for these cases. [B.5] [B.6] As the Unted Kngdom has thus far granted access to the MAP n elgble cases, even f there was an audt settlement between the taxpayer and HMRC, t should contnue grantng access for these cases. - As the Unted Kngdom has thus far granted access to the MAP n elgble cases when taxpayers have compled wth the Unted Kngdom s nformaton and documentaton requrements for MAP requests, t should contnue grantng access for these cases out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015). Where treates do not nclude the equvalent of Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. Specfcally wth respect to the treaty wth the former USSR that s beng appled to Belarus; the treaty wth former ugoslava that s beng appled to Bosna and Herzegovna, Montenegro and Serba; and the treaty wth former Czechoslovaka that s beng appled to the Czech Republc and the Slovak Republc, the Unted Kngdom should, once t enters nto negotatons wth the jursdctons for whch t apples those treates, request the ncluson of the requred provson. [B.7] In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. MAP gudance s comprehensve and avalable, but some further clarty could be provded. Although not requred by the Acton 14 Mnmum Standard, n order to further mprove the level of clarty of ts MAP gudance, the Unted Kngdom, when updatng ths gudance, could consder ncludng nformaton on: o Whether MAP s avalable n cases of: () the applcaton of antabuse provsons, () multlateral dsputes and () bona fde foregnntated self-adjustments; o Whether taxpayers can request for the mult-year resoluton of recurrng ssues through MAP; The possblty of suspenson of tax collecton durng the course of a MAP; The consderaton of nterest and penaltes n the MAP; and The process how MAP agreements are mplemented n terms of steps to be taken and tmng of these steps, ncludng any actons to be taken by taxpayers (f any). o [B.8] o o Recommendatons on gudance n relaton to audt settlements and access to MAP are dscussed n element B.10. Gudance on what nformaton taxpayers should nclude n a MAP request s avalable, but the nformaton requred s lmted. The Unted Kngdom could nclude n ts MAP gudance more nformaton on what taxpayers should nclude n a MAP request, for example the gudance the FTA MAP Forum agreed on. [B.9] - The Unted Kngdom should ensure that future updates of ts MAP gudance are made publcally avalable and easly accessble. Its MAP profle, publshed on the shared publc platform should be updated f needed. [B.10] MAP gudance does not nclude nformaton on the relatonshp between MAP and audt settlements, partcularly on whether enterng nto an audt settlement wll or wll not preclude access to MAP. The Unted Kngdom should ensure that t ntroduces n ts MAP gudance the envsaged nformaton on the relatonshp between audt settlements and MAP, specfcally whether enterng nto an audt settlement wll or wll not preclude access to MAP. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

65 SUMMAR 63 Part C: Resoluton of MAP cases 15 out of 129 tax treates do not contan a provson that s equvalent to Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015). [C.1] [C.2] Where treates do not nclude the equvalent of Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson va blateral negotatons. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson n all future treates. The Unted Kngdom submtted tmely comprehensve MAP statstcs and ndcated they have been matched wth ther MAP partners. The year 2016 was the frst year for whch MAP statstcs were reported under the new MAP Statstcs Reportng Framework. These statstcs were only recently submtted by most jursdctons that commtted themselves to the mplementaton of the Acton 14 Mnmum Standard and some stll need to be submtted or confrmed. Gven ths state of play, t was not yet possble to assess whether the Unted Kngdom s MAP statstcs match those of ts treaty partners as reported by the latter. Wthn the context of the state of play outlned above and n relaton to the MAP statstcs provded by the Unted Kngdom, t resolved durng the Reportng Perod 13.93% (17 out of 122 cases) of ts post-2015 cases n 4.32 months on average. In that regard, the Unted Kngdom s recommended to seek to resolve the remanng 86.07% of the post-2015 cases pendng on 31 December 2016 (105 cases) wthn a tmeframe that results n an average tmeframe of 24 months for all post-2015 cases. [C.3] - The Unted Kngdom should contnue to closely montor whether t has adequate resources n place to ensure that future MAP cases are resolved n a tmely, effcent and effectve manner. [C.4] - As t has done thus far, the Unted Kngdom should contnue to ensure that ts competent authorty has the authorty, and uses that authorty n practce, to resolve MAP cases wthout beng dependent on approval or drecton from the tax admnstraton personnel drectly nvolved n the adjustments at ssue. [C.5] - As t has done thus far, the Unted Kngdom should contnue to use approprate performance ndcators. [C.6] - Part D: Implementaton of MAP agreements [D.1] - As t has done thus far, the Unted Kngdom should contnue to mplement all MAP agreements f the condtons for such mplementaton are fulflled. [D.2] - As t has done thus far, the Unted Kngdom should contnue to mplement all MAP agreements on a tmely bass f the condtons for such mplementaton are fulflled. 103 out of 129 tax treates contan nether a provson that s equvalent to Artcle 25(2), second sentence of the ECD Model Tax Conventon (ECD, 2015), nor both alternatves provsons n Artcle 9(1) and Artcle 7(2). f those 103 tax treates: o 84 contan nether a provson that s equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) nor nclude any of the alternatve provsons n Artcle 9(1) and Artcle 7(2); and o 19 nclude a provson that s equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015), but are supplemented wth wordng that may lmt the mplementaton of MAP agreements due to constrants n the domestc legslaton of the contractng states. [D.3] Where treates do not nclude the equvalent of Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015), or nclude the alternatves provded n Artcle 9(1) and Artcle 7(2), and wll not be amended by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, the Unted Kngdom should request the ncluson of the requred provson be wllng to accept the ncluson of both alternatve provsons. Specfcally wth respect to the treaty wth the former USSR that s beng appled to Belarus; the treaty wth former ugoslava that s beng appled to Bosna and Herzegovna, Montenegro and Serba; and the treaty wth former Czechoslovaka that s beng appled to the Czech Republc and the Slovak Republc, the Unted Kngdom should, once t enters nto negotatons wth the jursdctons for whch t apples those treates, request the ncluson of the requred provson. In addton, the Unted Kngdom should mantan ts stated ntenton to nclude the requred provson, or be wllng to accept the ncluson of both alternatve provsons, n all future treates. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

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67 AEX A - TAX TREAT ETWRK F UITED KIGDM 65 Annex A Tax treaty network of Unted Kngdom Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? = yes = yes = yes Column 3 Is Art. 25(1), frst sentence ncluded? Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? Treaty partner = yes If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) E = yes, ether CAs = yes, only one CA = sgned pendng ratfcaton If no, please state reasons If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, alternatve provson n Art. 7 & 9 ECD MC? = yes = yes = yes = yes = no, no such provson = no, dfferent perod = yes = no, but access wll be gven to TP cases = no and such cases wll be accepted for MAP = no and access wll not be gven to TP cases = no but such cases wll not be accepted for MAP v = no, others reasons Albana Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? If no, wll your CA provde access to MAP n TP cases? = no, startng pont for computng the 3 year perod s dfferent = o Artcle 25(2) of the ECD MTC Algera Antgua and v = no MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017 Artcle 25(3) of the ECD MTC Arbtraton = no, but have Art 7 equvalent -Art. 25(5) = no, but have Art 9 equvalent mandatory other = no, but have both Art 7 & 9 equvalent = no = no = no - voluntary = no and no equvalent of Art 7 and 9 f yes:

68 66 AEX A - TAX TREAT ETWRK F UITED KIGDM Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? Barbuda Argentna Armena Australa Austra Azerbajan Bahran Bangladesh Barbados Belarus Belgum Belze v Bolva Bosna and Herzegovna Botswana MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

69 AEX A - TAX TREAT ETWRK F UITED KIGDM 67 Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Brtsh Vrgn Islands Brune v Bulgara Canada Cayman Islands Chle E Chna Chnese Tape Colomba Côte d'ivore Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? E Croata Cyprus* Czech Republc Denmark Egypt MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

70 68 AEX A - TAX TREAT ETWRK F UITED KIGDM Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? Estona Ethopa Falkland Islands Faroe Islands Fj Fnland France Gamba Georga Germany Ghana Greece v Grenada v Guernsey Guyana MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

71 AEX A - TAX TREAT ETWRK F UITED KIGDM 69 Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, wll your CA provde access to MAP n TP cases? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, please state reasons If no, alternatve provson n Art. 7 & 9 ECD MC? Hong Kong, Chna Hungary Iceland Inda Indonesa Ireland Isle of Man Israel v Italy Jamaca v Japan Jersey Jordan Kazakhstan Kenya Krbat v MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

72 70 AEX A - TAX TREAT ETWRK F UITED KIGDM Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? Kosovo Kuwat Latva Lesotho Lbya Lechtensten Lthuana Luxembourg Macedona Malaw v Malaysa Malta Maurtus Mexco Moldova Mongola MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

73 AEX A - TAX TREAT ETWRK F UITED KIGDM 71 Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Montenegro Montserrat Morocco Myanmar v amba v etherlands ew Zealand gera orway man Pakstan Panama Papua ew Gunea Phlppnes Poland Portugal MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

74 72 AEX A - TAX TREAT ETWRK F UITED KIGDM Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Qatar Romana Russa Saud Araba (2 years) Senegal Serba Serra Leone v Sngapore Slovak Republc Slovena Solomon Islands South Afrca v South Korea Span Sr Lanka MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

75 AEX A - TAX TREAT ETWRK F UITED KIGDM 73 Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Sant Ktts and evs Sudan Swazland Sweden Swtzerland Tajkstan Thaland Trndad and Tobago Tunsa v Turkey Turkmenstan Tuvalu v Uganda Ukrane Unted Arab Emrates MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

76 74 AEX A - TAX TREAT ETWRK F UITED KIGDM Column 1 Column 2 Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Treaty partner Column 4 Is Art. 25(1), second sentence ncluded? DTC n force? If yes, submsson to ether competent authorty (new Art. 25(1), frst sentence) If no, please state reasons If no, wll your CA provde access to MAP n TP cases? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MC? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Unted States Uruguay Uzbekstan Venezuela Vet-am Zamba Zmbabwe * Footnote by Turkey: The nformaton n ths document wth reference to "Cyprus" relates to the southern part of the Island. There s no sngle authorty representng both Turksh and Greek Cyprot people on the Island. Turkey recognzes the Turksh Republc of orthern Cyprus (TRC). Untl a lastng and equtable soluton s found wthn the context of Unted atons, Turkey shall preserve ts poston concernng the "Cyprus" ssue. Footnote by all the European Unon Member States of the ECD and the European Unon: The Republc of Cyprus s recognzed by all members of the Unted atons wth the excepton of Turkey. The nformaton n ths document relates to the area under the effectve control of the Government of the Republc of Cyprus. MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

77 AEX B - MAP STATISTICS PRE-2016 CASES 75 Annex B MAP Statstcs pre-2016 cases umber of pre-2016 cases closed durng the reportng perod by outcome: Category of cases o. f pre-2016 cases n MAP nventory on 1 January 2016 Column 1 Attrbuton/ Allocaton thers Total Agreement fully elmnatng double taxaton / fully resolvng taxaton not n accordance wth tax treaty Agreement partally elmnatng double taxaton / partally resolvng taxaton not n accordance wth tax treaty Agreement that there s no taxaton not n accordance wth tax treaty o agreement ncludng agreement to dsagree Any other outcome o. f pre cases remanng n on MAP nventory on 31 December 2016 Average tme taken (n months) for closng post-2015 cases durng the reportng perod Dened MAP access bjecton s not justfed Wthdrawn by taxpayer Unlateral relef granted Resolved va domestc remedy Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

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79 AEX C - MAP STATISTICS PST-2015 CASES 77 Annex C MAP Statstcs post-2015 cases umber of post-2015 cases closed durng the reportng perod by outcome: Dened MAP access bjecton s not justfed Wthdrawn by taxpayer Unlateral relef granted Resolved va domestc remedy Agreement fully elmnatng double taxaton elmnated / fully resolvng taxaton not n accordance wth tax treaty Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column 14 Column 15 Treaty partner o. f post2015 cases n MAP nventory on 1 January 2016 o. f post2015 cases started durng the reportng perod Column 1 Column 2 Agreement partally elmnatng double taxaton / partally resolvng taxaton not n accordance wth tax treaty Agreement that there s no taxaton not n accordance wth tax treaty o agreement ncludng agreement to dsagree Any other outcome o. f post cases remanng n MAP nventory on 31 December 2016 Average tme taken (n months) for closng post2015 cases durng the reportng perod Attrbuton/ Allocaton thers Total MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

80 78 GLSSAR Glossary Acton 14 Mnmum Standard The mnmum standard as agreed upon n the fnal report on Acton 14: Makng Dspute Resoluton Mechansms More Effectve APA gudance Statement of Practce 2/2010 Look-back perod Perod startng from 1 January 2015 for whch the Unted Kngdom wshed to provde nformaton and requested peer nput MAP gudance Statement of Practce 1/2011 MAP Statstcs Reportng Framework Rules for reportng of MAP statstcs as agreed by the FTA MAP Forum Multlateral Instrument Multlateral Conventon to Implement Tax Treaty Related Measures to Prevent Base Eroson and Proft Shftng ECD Model Tax Conventon ECD Model Tax Conventon on Income and on Captal as t read on 15 July 2014 Pre-2016 cases MAP cases n a competent authorty s nventory that are pendng resoluton on 31 December 2015 Post-2015 cases MAP cases that are receved by a competent authorty from the taxpayer on or after 1 January 2016 Reportng Perod Perod for reportng MAP statstcs that started on 1 January 2016 and that ended on 31 December 2016 Terms of Reference Terms of reference to montor and revew the mplementng of the BEPS Acton 14 Mnmum Standard to make dspute resoluton mechansms more effectve MAKIG DISPUTE RESLUTI MRE EFFECTIVE - MAP PEER REVIEW REPRT UITED KIGDM ECD 2017

81 RGAISATI FR ECMIC C-PERATI AD DEVELPMET The ECD s a unque forum where governments work together to address the economc, socal and envronmental challenges of globalsaton. The ECD s also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the nformaton economy and the challenges of an ageng populaton. The rgansaton provdes a settng where governments can compare polcy experences, seek answers to common problems, dentfy good practce and work to co-ordnate domestc and nternatonal polces. The ECD member countres are: Australa, Austra, Belgum, Canada, Chle, the Czech Republc, Denmark, Estona, Fnland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latva, Luxembourg, Mexco, the etherlands, ew Zealand, orway, Poland, Portugal, the Slovak Republc, Slovena, Span, Sweden, Swtzerland, Turkey, the Unted Kngdom and the Unted States. The European Unon takes part n the work of the ECD. ECD Publshng dssemnates wdely the results of the rgansaton s statstcs gatherng and research on economc, socal and envronmental ssues, as well as the conventons, gudelnes and standards agreed by ts members. ECD PUBLISHIG, 2, rue André-Pascal, PARIS CEDEX 16 ( P) ISB

82 ECD/G20 Base Eroson and Proft Shftng Project Makng Dspute Resoluton More Effectve MAP Peer Revew Report, Unted Kngdom (Stage 1) Inclusve Framework on BEPS: Acton 14 Addressng base eroson and proft shftng s a key prorty of governments around the globe. In 2013, ECD and G20 countres, workng together on an equal footng, adopted a 15-pont Acton Plan to address BEPS. Beyond securng revenues by realgnng taxaton wth economc actvtes and value creaton, the ECD/G20 BEPS Project ams to create a sngle set of consensus-based nternatonal tax rules to address BEPS, and hence to protect tax bases whle offerng ncreased certanty and predctablty to taxpayers. In 2015, the ECD and G20 establshed an Inclusve Framework on BEPS to allow nterested countres and jursdctons to work wth ECD and G20 members to develop standards on BEPS related ssues and revewng and montorng the mplementaton of the whole BEPS Package. Under Acton 14, countres have commtted to mplement a mnmum standard to strengthen the effectveness and effcency of the mutual agreement procedure (MAP). The MAP s ncluded n Artcle 25 of the ECD Model Tax Conventon and commts countres to endeavour to resolve dsputes related to the nterpretaton and applcaton of tax treates. The Acton 14 Mnmum Standard has been translated nto specfc terms of reference and a methodology for the peer revew and montorng process. The mnmum standard s complemented by a set of best practces. The peer revew process s conducted n two stages. Stage 1 assesses countres aganst the terms of reference of the mnmum standard accordng to an agreed schedule of revew. Stage 2 focuses on montorng the follow-up of any recommendatons resultng from jursdctons stage 1 peer revew report. Ths report reflects the outcome of the stage 1 peer revew of the mplementaton of the Acton 14 Mnmum Standard by the Unted Kngdom, whch s accompaned by a document addressng the mplementaton of best practces whch can be accessed on the ECD webste: Consult ths publcaton on lne at Ths work s publshed on the ECD Lbrary, whch gathers all ECD books, perodcals and statstcal databases. Vst for more nformaton. sbn P 9HSTCQE*ccggh+