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HMRC Enquiry Foreign tax credit relief

HMRC have opened enquiry into 2018 tax return.

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Client has pension in Nethelands, tax is deducted at source & tax credit relief claimed each year (since 2014/15)

HMRC enquiry officer has told me in telephone call that the pension is taxable in country of residence only, in this case UK, & even though tax deducted at source no tax relief can be claimed. Officer advised that client needs to go back to Dutch tax authorities & claim repayment from them.

Can anybody tell me if this is correct? The officer did not  mention the earlier years.

Many thanks




Replies (5)

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By Tim Vane
17th Jun 2019 11:36

Yes it is probably correct but check the caveats in article 17. The client will have to repay the tax credit and interest. Hopefully no penalties but you will have to sweet talk the inspector (I assume the client did not take professional advice so you can plead ignorance for them, though if the client had an adviser at the time then HMRC might not take a lenient view).

You will need to request the tax back from the Dutch tax office.

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By accountantccole
17th Jun 2019 11:55

Unless government pensions, it sounds like they are right. I've had UK clients caught the other way whilst resident abroad.

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By K81
17th Jun 2019 16:44

unfortunately I completed the tax return, client has three pensions in Holland but only one is taxed, it is a widows pension (private not state)
oversight on my part I'm afraid.

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By David Heaton
18th Jun 2019 10:12

The HMRC officer is correct. The DTA makes the pension taxable only in the UK. You can apply online to HMRC for a certificate of residence that can be sent to the NL tax office with the treaty claim. The Dutch will then issue further claim forms. If you ask nicely, you might get HMRC to agree to let sleeping dogs lie for the closed years and just put it right for the future. Bear in mind the NL tax year is different, so this may affect the start date of your residence certificate.

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