Inland Revenue 28
                                                  17 March 1998
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   REQUIREMENT FOR TAXPAYERS TO NOTIFY THE INLAND REVENUE OF 
                ADJUSTMENTS TO FOREIGN TAX PAID
                                
The Chancellor today announced that all taxpayers who have
claimed relief  for foreign tax will from today have a clear
statutory obligation to notify the  Inland Revenue if the
amount of foreign tax they have paid is adjusted and  this
results in the claim becoming excessive. This will make the
tax system  fairer and more transparent.

The provision will apply to adjustments to foreign tax made by
overseas tax  authorities on or after Budget day. 

Notification must be given in writing. 

DETAILS

1. A taxpayer may claim relief from United Kingdom tax in
respect of foreign  tax he or she has paid.  There is no clear
requirement in the present  legislation (other than in
Regulations concerning Lloyd's underwriters) that the 
taxpayer should advise the Inland Revenue if subsequently the
foreign tax is  adjusted by the foreign tax authority so that
the claim is rendered excessive,  for example, because all, or
part, of the foreign tax has been repaid.

2. Under the Budget proposal, taxpayers (both individuals and
companies) will  be required to notify the Inland Revenue
within one year of any adjustment to  the amount of foreign
tax in respect of which they have claimed relief from  United
Kingdom tax.  This requirement only applies however in
circumstances  where the adjustment is such that it results in
the claim to relief becoming  excessive.  Although there is no
reason to believe that taxpayers have failed,  to a
significant extent, to notify the Inland Revenue of such
adjustments in the  past, this proposal clarifies taxpayers'
obligations under Self Assessment.   This change is one that
was put forward during discussions between the  Inland Revenue
and representatives of the business community.

3. Failure to comply with this requirement will result in the
taxpayer becoming  liable to a penalty not exceeding the
amount by which the claim has been  rendered excessive. 

NOTES FOR EDITORS

Credit may be claimed in respect of foreign tax paid, either
on a unilateral  basis or under the terms of bilateral double
taxation agreements.  Relief is  given against the United
Kingdom tax computed by reference to the same  income or gains
in respect of which the foreign tax has been paid. 

INLAND REVENUE PRESS OFFICE
Media enquiries to: 0171 438 6692/6706/7327 
(Out of hours: 0860 359544)
Non media enquiries to: 0171 438 6420/6425
(Office hours only)