D4.803 Method of claiming double tax relief
The provisions in this article apply where an election has not been made for exemption for the profits of a foreign permanent establishment (D4.801).
The potential for double taxation arises in a variety of situations where, under the laws of two or more countries, tax may be levied on the same income, capital gains, transfers of capital or net worth. Often there will be a double tax agreement between the two countries concerned, such that only one country will actually tax the income. However, in the absence of such an agreement, relief is available in the UK under our domestic law (unilateral relief) for the foreign tax paid1.
Companies can choose whether to claim credit relief against their UK corporation tax liability, or simply treat the foreign tax suffered as a