UK Law and Practice Contributed by: Russell Warren and Michael Langan, King & Spalding LLP
7.3 Other Forms of International Tax Collaboration See 7.1 Legal Framework for Administrative Co- Operation and 7.2 Exchange of Information Clauses in Tax Agreements for the framework for collabo - ration as set out in bilateral treaties and the OECD Multilateral Convention. The UK also participates in the OECD’s International Compliance Assurance Pro - gramme (ICAP) and has done so since its inception in 2018. The ICAP provides a framework for multi - national enterprises and tax authorities to exchange information and perspectives on country-by-country reports. The UK also participates in both joint and simultane - ous tax audits, exchanging information with a view to establishing a consistent set of facts in the former, while the latter involves a more extensive and co- ordinated effort with the goal of reaching agreement on both the facts and tax treatment of cross-border transactions. 8. Mutual Agreement Procedures and Arbitration 8.1 Availability and Legal Basis The UK has a mutual agreement procedure (MAP) pro - gramme which is given statutory effect in the Taxation (International and Other Provisions) Act 2010. The vast majority of the UK’s double tax treaties contain a MAP article. 8.2 Application Deadlines Where the MAP is invoked under a double tax treaty, the case must be presented before the expiration of a period of six years following the end of the chargeable period to which the case relates; or such longer period as may be specified in the treaty. Many UK tax treaties follow Article 25 of the Model Convention such that a person must present their case “[with]in 3 years of the first notification of the action which results or is likely to result in double taxation”. Accordingly, the tax treaty may extend the statutory six-year time limit.
8.3 Mandatory Binding Arbitration The UK provides for MAPs under its treaties, with legal bases in domestic law and treaties. Deadlines and the availability of arbitration depend on the specific treaty. See 7.1 Legal Framework for Administrative Co- Operation and 7.2 Exchange of Information Clauses in Tax Agreements for further details on MAP. Mandatory binding arbitration is available but only where specifically provided for in the relevant double tax treaty (or where the relevant arbitration provisions of the MLI have been incorporated into the double tax treaty). Mandatory binding arbitration can typically be considered where the MAP has not resolved the dis - pute within a two- (or three-) year period. While HMRC is generally in favour of mandatory binding arbitration, the specific double tax treaty (or list of reservations of the MLI) should be considered in all cases. Part 5 of the Taxation (International and Other Pro - visions) Act 2010 provides the legislative basis for tax payors to enter into advance pricing agreements (APAs) with HMRC. There is also extensive HMRC guidance and a statement of practice which sets out the legal framework within which an APA may be entered into. APAs can be either unilateral or multilat - eral, with the former entered into between HMRC and the tax payor and providing certainty only in relation to the transfer pricing treatment in the UK. 9.2 Other Mechanisms As per 9.1 Advance Pricing Agreements , the UK pro - vides APAs on a unilateral and multilateral basis. Large Business Compliance Manager Programme The UK also provides a Large Business Compliance Manager programme for businesses with an annual turnover of more than GBP200 million, or which oper - ate in a complex sector or which have complex tax affairs. This involves a more hands-on approach, with regular interaction with large businesses to allocate them a “risk” rating and to work collaboratively with 9. Dispute Prevention 9.1 Advance Pricing Agreements
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