14. As part of the MAP procedure, the subject is informed in writing of the decision and receives an explanation of the outcome when an agreement is reached between the CAs concerned. As soon as the subject has accepted the agreement, written confirmation of the agreement is exchanged between the administrations and made available to the subject. The results are processed by the tax authorities and relief is obtained. If the taxpayer does not accept the agreement, the map process will be considered complete and no adjustment is made. The United Kingdom has made efforts to strengthen the efficiency and effectiveness of the dispute resolution process and minimize the incidence of involuntary double taxation in light of recent experience and developments, particularly in the context of Action 14 “Making Conflict Resolution More Effective” (Action Report 14) of the Base Erosion Profit Shifting (BEPS) project. The United Kingdom has committed itself to the minimum standard with regard to: in particular, Article 19 of the MLI stipulates that a binding arbitration procedure must be mandatory if the competent authorities are unable to reach an agreement on the solution of a case within two years of its start. This is a significant restriction on POPs cases in the past, as the competent authorities were only required to try to resolve cases and disputes could be resolved indefinitely. Section 19 ensures that treaty disputes will be resolved within a specified time frame, making the MAP a more attractive option for taxpayers.
In addition, sections 20 to 25 provide for the practical functioning of arbitration. In the past, it was often practical constraints or a lack of agreement on how to proceed that blocked the solution. There are clear and often long delays in applying for the POP. In particular, Article 16, paragraph 1, second sentence, provides that the MAP case must be brought within a specified period of time, i.e. less than three years from the first notification of the tax measure, and not in accordance with the provisions of a secure tax treaty. This means that taxpayers are not able to present their arguments within three years of the first notification of the tax measure leading to taxation, in accordance with the provisions of the secured tax treaty. The first return is generally considered the final assessment at the end of a tax collection or other. In the revised guidelines, HMRC also recognizes that there may be circumstances in which foreign tax authorities enter into informal agreements with subjects, provided access to POPs is restricted. Hmrc will continue to consider providing facilities in such circumstances, although the likelihood of a total elimination of double taxation is reduced in cases where dialogue between HMRC and foreign tax administration is limited.
The Practice Statement [see INTM 423120] describes the UK`s practice with respect to methods of reducing or preventing double taxation and replaces the Practice Statement 1 (2011). These revisions were motivated by the experience and evolution of dispute resolution, in particular the work of the Organisation for Economic Co-operation and Development (OECD) in the “Base Erosion and Profit Shifting” (BEPS) project as part of Action 14 “Strengthening the Effectiveness of Conflict Resolution Mechanisms” and Action 15 “A Mandate for the Development of a Multilateral Instrument for Measures of the Tax Convention Against Beps” [INTM 423120].