The following Tax guidance note Produced in partnership with David Klass of Hunton Andrews Kurth provides comprehensive and up to date legal information covering:
Brexit: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this Practice Note. For further guidance, see Practice Note: Brexit—UK tax consequences.
The background to this topic is the existence of a general rule of international law concerning the fact that generally one jurisdiction will not assist the other to collect the other's taxes. In the UK this is known as the rule in Government of India v Taylor, and in the US as the 'revenue rule'.
In summary, the principle is that:
neither courts nor tax officials should assist in the collection of foreign taxes, and
a state is prevented from suing for taxes owed to it in a foreign court
However the significance of this type of mutual assistance has grown in recent years and is likely to continue to do so, as increasingly taxpayers have income-producing assets distributed throughout the world. This, coupled with the above rule, has led to the creation of cross-border agreements to provide administrative assistance in the collection of taxes (AIC).
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