Residency Status of a Limited Company

Residency Status of a Limited Company

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Hi,

This does not relate to any particular client I am currently dealing with, but is a question that came to me in the middle of the night (yes, very exciting dreams!!) and is something I have not dealt with yet (possibly something I may never deal with), but interested to read up on just in case.

Can a limited company only ever be resident in the UK for tax purposes, or are they able to claim non residency similar to an individual? My first thoughts are no, as they are a UK resident business by the nature of being a UK registered limited company, and as such are taxed in the UK. If they wanted to be taxed by another countries rules/rates etc. then a company would need to be set up there (obviously dependent on where the trade takes place etc.).

I may well be wrong however, and I am willing to be proven otherwise. Any help, links etc that you are able to provide for me to read up on would be most appreciated. I do not remember company residency being covered in my ACCA studies in a similar way to residency for individuals

Once again, your opinions are much appreciated.

James

Replies (5)

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paddle steamer
By DJKL
17th Aug 2015 16:21

Consider Presence,Control etc

Tax residence of a company surely depends on somewhat more than just their place of registration. If it did not tax planning would be simple and fees for those advising re international tax planning would be much lower.

I think for instance a couple of other areas need considered like:

Presence in the UK-permanent establishment

Where control is exercised

Someone will no doubt be along who is better versed in international tax to advise in due course, meantime starting place below:

http://www.hmrc.gov.uk/manuals/intmanual/intm120200.htm

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By King_Maker
17th Aug 2015 20:50

A UK registered company is automatically resident in the UK for CT purposes in most circumstances.

The "central management & control" test applies to non-UK registered companies.

However, it is possible to be regarded as non-UK resident under a relevant Double Tax Treaty.

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By JLPrice
18th Aug 2015 10:35

Scenario

Thanks for that. Say there was a one man band limited company, who has his registered office as his home address in the UK. He travels round the world for his job, spending approximately 9-10 months of the year in countries outside the UK.

 

As the company is registered in the UK, would it be resident for CT purposes in he UK, even if the principal activity of the business is carried on outside the UK.

 

Would the situation change if the director was deemed to be non resident due to his circumstances? (I'd assume not given different legal entities etc.).

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Replying to RayM55:
paddle steamer
By DJKL
18th Aug 2015 11:02

Would it

JLPrice wrote:

Thanks for that. Say there was a one man band limited company, who has his registered office as his home address in the UK. He travels round the world for his job, spending approximately 9-10 months of the year in countries outside the UK.

 

As the company is registered in the UK, would it be resident for CT purposes in he UK, even if the principal activity of the business is carried on outside the UK.

 

Would the situation change if the director was deemed to be non resident due to his circumstances? (I'd assume not given different legal entities etc.).

Would it not possibly depend on which other countries the company traded within, whether it might be considered resident in these other countries and the double tax treaty with each of these countries.

Not sure there is a one size fits all answer here but international tax is well outside my comfort zone.

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By User deleted
18th Aug 2015 12:20

A company incorporated in the UK is tax resident in the UK (s.14 CTA/09), unless it's treaty resident elsewhere applying the 'central management & control' rule where treaty provisions apply with regard to a particular jurisdiction. A UK resident company is taxable on its worldwide income (s.5(1) CTA/09, so place of principal activity is irrelevant.

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