Assistance in collection in tax matters
Produced in partnership with David Klass of Hunton Andrews Kurth
Assistance in collection in tax matters

The following Tax guidance note Produced in partnership with David Klass of Hunton Andrews Kurth provides comprehensive and up to date legal information covering:

  • Assistance in collection in tax matters
  • Why is assistance in collection needed?
  • What is the basis of international assistance in collection?
  • Persons covered
  • What can be claimed?
  • What is the governing law?
  • Taxpayer’s rights
  • On what grounds can a request for assistance be denied?
  • Measures of conservancy
  • Memorandum of understanding

Why is assistance in collection needed?

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:

  1. neither courts nor tax officials should assist in the collection of foreign taxes, and

  2. 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).

What is the basis of international assistance in collection?

Assistance in collection between states is usually achieved using one of three methods:

  1. a bilateral double tax treaty or convention (DTT)

  2. the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters (MAATM), and/or

  3. the EU Directive on Mutual Assistance for the Recovery of Claims (MARD)

Article 27 on the assistance in the collection of taxes was introduced into