Chapter INTM423010

Published date09 April 2016
Record NumberINTM423010
Statement of Practice 1 (2018)

The Statement of Practice [see INTM 423120] sets out the UK’s practice in relation to methods for reducing or preventing double taxation and supersedes Statement of Practice 1 (2011). The revisions were prompted by experience and developments in dispute resolution, in particular, the work done in the Organisation for Economic Co-operation and Development (OECD) as part of the Base Erosion and Profit Shifting (BEPS) project under Action 14 “Making Dispute Resolution Mechanisms More Effective” and Action 15 “A Mandate for the Development of a Multilateral Instrument on Tax Treaty Measures to Tackle BEPS” [see INTM 423120]. The aim of the statement, which should be read in conjunction with this guidance, is to assist applicants by providing further clarity on the UK’s Mutual Agreement Procedure (MAP) process.

The statement provides details on the MAP Process and the use of MAP under the relevant UK tax treaty and/or the EU Arbitration Convention (EUAC). It also describes the UK’s approach to the role of arbitration as part of the MAP Process.

The Aim of MAP

MAP is a process which enables Competent Authorities of treaty partners to interact with the intention to resolve international tax disputes. The Competent Authorities are obliged to use their best endeavours to reach an agreement with a view to the avoidance of taxation which is not in accordance with the MAP article in the relevant tax treaty. In the UK, the Commissioners for HM Revenue and Customs (HMRC), or their authorised representatives, the UK Delegated Competent Authorities, have autonomy to enter into MAP agreements in accordance with the terms of the relevant tax treaty without being dependent on the approval or the direction of HMRC personnel directly involved with the adjustment at issue and without being influenced by policy considerations.

As part of its work on improving the MAP Process, the OECD has published a Manual on Effective Mutual Agreement Procedures (MEMAP) [see INTM 423120]. MEMAP sets out best practices for Competent Authorities of OECD countries in relation to the MAP Process.

OECD Model Convention

MAP is described in Article 25 of the OECD Model Convention (the Model Convention) [see INTM 423120] and is discussed in the Commentary on Article 25 of the Model Convention (the Commentary).

Articles 25 (1) and (2) have broad application and provide for MAP where a taxpayer considers they have been or will be taxed other than in the...

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