Macklin v HMRC concerned where a pension plan was established for the purpose of double tax treaty relief. Jonathan Schwarz (Temple Tax Chambers) considers the case and its implications
World Bank Group employees who retire to the UK qualify for exemption from UK income tax on their pensions under the US/UK tax treaty. In Macklin v HMRC [2015] UKUT 39 (TCC) the Upper Tribunal overruled the First-tier Tribunal [2013] UKFTT 554 (TC). It concluded that the exemption which non-US citizens resident in the US enjoy on their World Bank pensions must also be given to UK resident non-US citizens by reason of art 17(1)(b) of the US/UK double tax treaty.
Article 17(1)(a) of the treaty grants exclusive taxing rights over pensions to the state of residence of the recipient of the pension payment. This...
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