Double Taxation Relief USA, Pension Lump-Sum

I am a German national who left the UK in 1996 and am therefore no longer a UK tax resident. I am currently a US resident for tax purposes and am over the age of 55. In August this year, my entitlement under a UK occupational pension scheme was paid as a lump sum. The lump sum payment was over £125,140. My question is whether the tax withheld on the lump sum is covered by the double tax treaty with the USA and is eligible for relief, i.e. whether I can claim back the tax withheld?

Hi,
Article 17(2) with reference to Article 1 (4).  
If you receive a Lump Sum payment from a pension scheme then this will be taxable only in the country that the payment arises, in this case, the UK.
(Uk/USA Double Taxation Agreement - 2002).  
You would not be able to claim the tax witheld.  
Instead you would claim a foreign tax credit in the USA.
Thank you.

Not HMRC...HMRC this is incorrect, the DTA says it is ONLY taxable in the UK, therefore, there is no tax credit to claim in the US as it is not taxable there!!

HMRC is correct. Article 17(2) is overridden by Article 1(4) which allows the US to tax the lump sum. This point is mentioned in the HMRC Double Taxation Manual at DT19853.