A unilateral credit was available for interest paid by a US subsidiary to a UK parent company where the interest was subject to deduction of US withholding tax, but no entitlement arose to benefit under the double tax treaty between the UK and US. 

The appellant company (AUK) was the wholly-owned subsidiary of a Japanese parent company. AUK established a wholly-owned subsidiary (AUS), which was resident in the US for tax purposes. During its accounting periods ended 31 March 2007 to 31 March 2009, AUK made loans to AUS and received interest payments. The US imposed withholding tax (at 30%) on the interest received. AUK was liable to corporation tax on the interest received from AUS. 

On 18 April 2008, AUK applied to the US revenue authorities (IRS) for access to benefits of the double tax convention between