Non resident companies

Last week the question of UK and overseas companies came up. It is an area that often starts a conversation when international groups are looking to set up in the UK.

A company is resident in the UK if it is incorporated in the UK. For example, if you have a Limited Company that you have incorporated in England then it will be a UK resident company.

A UK resident company will be within the charge for corporation tax on all its profits wherever the income arises. For example, if your UK Limited Company has sales income from customers in Europe then these sales will be within the charge for corporation tax.

The situation with a UK incorporated company is generally clear and consistent, but matters do become more complicated when considering non UK incorporated companies that generate income from the UK. For example, a Limited company incorporated in Australia, but with customers in the UK. Can this overseas company become liable to UK corporation tax even if it was not incorporated in the UK?

Yes, it can.

An overseas company is chargeable to corporation tax if it carries on a trade in the UK through a permanent establishment. More on permanent establishments later, but for now please be aware that a permanent establishment can be a branch or an agency.

Just one final point - as ever the above is a general overview only. You’ll find there are many circumstances in UK tax legislation where it varies depending on the specifics. Please consider your individual situation carefully to avoid missing both pitfalls and opportunities.