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ORIP – final guidance issued by HMRC

ORIP – final guidance issued by HMRC

HMRC issued updated guidance on the Overseas Receipts in respect of Intangible Property (ORIP) rules on 5 October 2020.

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Sarah churton

Partner, International Tax

KPMG in the UK

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HMRC have issued updated guidance in relation to the Overseas Receipts in respect of Intangible Property (ORIP) rules. Broadly speaking, the ORIP rules, which came into effect from 6 April 2019, impose a direct UK income tax charge (currently 20 percent) on gross amounts of income received by certain non-UK resident persons in respect of the enjoyment or exercise of rights in respect of intangible property (IP), where those amounts relate to the sale of goods or services in the UK. Compared with the draft guidance that was published in October 2019 the changes principally relate to the compliance process with additional detail provided in relation to the processes and procedures for notifying, reporting and paying tax under ORIP as well as making treaty relief claims. There have also been some further illustrative examples added to the guidance.

The updated guidance on ORIP can be found in HMRC’s International Manual from INTM620000 onwards. From a procedural perspective key points to note from the updated guidance are as follows:

Notification

An updated dedicated email address has been provided for taxpayers to notify HMRC that they have a liability under the ORIP rules. A pro-forma notification template is also included. Tax geared penalties apply where a company fails to notify by the relevant date.

Reporting

The guidance confirms that any liability under the rules should be reported on HMRC’s form SA700 ‘Non-resident Company Income Tax Return’. This must be filed with HMRC as a paper return sent to the address on the form and electronic returns will not be accepted. As electronic returns are not accepted the filing date is 31 January following the end of the year of assessment and not 31 October.

Payment

Tax due under the ORIP rules will follow normal income tax self-assessment rules. The guidance at INTM620610 gives some examples of how this will apply in practice.

Treaty claim guidance

A new page has been added to explain what information HMRC require and how taxpayers can make a treaty relief claim under the ORIP regime. The guidance also notes that where HMRC accept a treaty relief claim “relief will be acknowledged in writing to apply indefinitely, provided the arrangements have been accurately described in the application and continue without a material change. A new claim should be made where the underlying arrangements or the nature of the income changes in a way which is more than insignificant.” It will therefore be important for taxpayers to continue to monitor arrangements where treaty relief has been approved to ensure the conditions for relief continue to apply and that HMRC are promptly made aware of material changes.

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