Double tax treaties

What are double tax treaties?

A double tax treaty, agreement or convention (referred to here as DTTs) is:

•
an agreement
•
between two states (known as bilateral agreements) or, more rarely, between more than two states (known as multilateral agreements)
•
usually to deal with:
1. ◦
  the allocation of taxing rights between the two (or more) states (known as contracting states) over income and gains (and in certain DTTs other areas such as estates on death), and
2. ◦
  the prevention of avoidance and evasion of tax cross-border

The majority of DTTs are based on one of the international model conventions produced by:

•
the Organisation for Economic Co-operation and Development (OECD)
•
the United Nations (UN), or
•
the US

DTCs are generally structured in a similar way in three main parts:

•
the first dealing with key definitions and the scope of the DTT, ie which people and taxes are covered by it
•
the second, main, part, dealing with specific rules for certain types of income and gains, eg how to deal with dividends paid from one contracting state to the other, and
•
the

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Latest Tax News

Tax weekly highlights—19 March 2026

This week's edition of Tax weekly highlights includes: (1) the enactment of Finance Act 2026 on 18 March 2026, (2) HMRC launching a consultation on extending the Uncertain Tax Treatment regime, (3) News Analysis on the Court of Appeal’s decision in Muller UK and Ireland Group LLP that amortisation debits were correctly disallowed by HMRC, (4) News Analysis on the UT’s decision in Putney Power Limited on the issue of whether the appellants had begun to trade by the relevant date for EIS relief purposes, (5) new HMRC guidance on multinational top-up tax and domestic top-up tax reporting software, and (6) News Analysis on the FTT’s decision in Countrywide Partners Limited to uphold a penalty for failure to comply with a stop notice issued under the promoters of tax avoidance schemes (POTAS) rules.

Upper Tribunal denies EIS relief as trade not commenced (Putney Power and Piston Heating v HMRC)

Tax analysis: The Upper Tribunal (UT) has held that the First-tier Tax Tribunal (the FTT) made a material error of law in its approach to determining when a trade has ‘begun to be carried on’ by a company for the purposes of qualifying for Enterprise Investment Scheme (EIS) relief under section 179(2)(b) of the Income Tax Act 2007 (ITA 2007). The FTT had identified a set of principles by reference to factors which were of relevance in previous cases and applied those ‘legal’ principles to determine that neither Putney Power Limited (‘Putney’) nor Piston Hearing Services Ltd (‘Piston’) had begun to carry on a trade by the relevant date of 4 April 2018. The UT set aside the FTT’s decision on the basis that the FTT had sought to apply a principles-based test which did not exist as a matter of law. The proper approach requires a multi-factorial evaluation of all of the circumstances in the case at hand. The UT re-made the decision but ultimately reached the same conclusion as the FTT, dismissing the appeals of both Putney and Piston and holding that neither company had commenced trading by the relevant date. The decision is significant because it clarifies that there is no strict legal test for when a trade commences: the question remains highly fact sensitive and will be determined by reference to the particular facts and circumstances of each case. Written by Kate Ison (partner at Macfarlanes LLP) and Victoria Braid (associate at macfarlanes LLP).

FTT upholds £1m penalty for stop notice breach (Countrywide Partners Ltd v HMRC)

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