Tax Treaty Case Law around the Globe 2015

S. 283United Kingdom: Michael Macklin vs. HMRC

Philip Baker

This case was presented at the 2014 Tax Treaty Case Law Around the Globe conference at which time I indicated that I thought that the First-tier Tribunal decision had been wrongly decided, that it would go on appeal, and it would be reversed. I was correct; it did; it was.

The case concerned Michael Macklin: an individual, originally resident in the United Kingdom. He went to work for the World Bank. When he retired he took his pension from the World Bank Staff Retirement Plan and he returned to live in the United Kingdom (he had been working in the United States).

There is a special provision in the United Kingdom-United States Tax Treaty under Article 17(1)(b) stating that, where a pension is paid from a pension scheme established in the other contracting state (in this case the United States) which would have been exempt in the United States then it is also exempt in the United Kingdom: deliberate double exemption. There was a definition of “pension scheme” which again referred to a pension scheme being established in a contracting state, and there was an exchange of notes which identified which pension schemes were included. Thi...