Autumn Budget 2017: Powers to Implement the Multilateral instrument

Currently, the legislation relating to double tax treaties and the reliefs they offer is found in TIOPA 2010 and IHTA 1984. Whilst the relief will broadly remain the same the treaties are going to be revised.

Many international companies structure their offshore companies to use advantageous double tax treaties through “Treaty Shopping”.

On 7 June 2017 the UK signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS). The Convention implements one of the OECDs 15 action points to tackle cross border tax abusive practices.

This legislation will effectively allow the UK to unilaterally rewrite its double tax treaties to comply with the agreed position to prevent treaty abuse through treaty shopping and improve the competent authority dispute resolution process within the treaty network. However, in order to do this, the Multilateral Instrument must be given effect under UK law. This will be effective once Royal assent is given to the Finance Bill 2017-18.

Broadly speaking, as this is a technical measure, this will have no real impact on individuals or businesses in the UK.