The government has published a consultation document designed to:
- seek views on the DTTP scheme
- canvass opinion on the possible extension of the DTTP scheme, to cover funds and partnerships.
The DTTP scheme was launched in September 2010. The scheme acts as an administrative simplification, as an alternative to the rather cumbersome process whereby overseas lenders must, on a loan-by-loan basis, apply to HMRC for UK-source interest payments to be paid at reduced (or zero) rates of UK withholding tax under an applicable double tax treaty. Under the DTTP scheme, the status of an overseas lender granted a “passport” by HMRC can be checked by UK borrowers under multiple loans and, under a simplified administrative procedure, reduced UK withholding (or, as applicable, no UK withholding) can be levied on the interest payments.
At the most basic level, the consultation seeks views as to whether the current DTTP scheme should be continued. It is assumed that most respondents will answer “yes” to this question.
More interestingly, the consultation document proposes extending the DTTP scheme in a number of ways, namely:
- making the DTTP scheme available to loans made to a wider range of UK borrowers (ie not just UK corporate borrowers). In particular it is proposed that loans to UK partnerships should be brought within the scope of the DTTP
- making the DTTP scheme available to a wider range of overseas lenders. As well as overseas partnerships, the consultation also seeks views on permitting sovereign investors and overseas pension funds to access the DTTP scheme.
The consultation document can be viewed here.