Whether or not a company is UK tax resident is naturally a matter which is of some interest to HMRC.
Companies who are incorporated in the UK are automatically tax resident; it is only those companies which are incorporated overseas whose status must be otherwise determined.
Case law has established that a company incorporated overseas will be UK tax resident, if it is centrally managed and controlled in the UK. Care is therefore required by overseas companies to ensure they do not bring themselves within the UK tax net unintentionally, in particular those who have UK based Directors.
The recent case of Development Securities (No 9) Ltd & others v HMRC highlighted the difficulties of keeping an overseas company from being tax resident. Here HMRC successfully asserted that a Jersey incorporated company was UK tax resident, as despite company decisions being made by Jersey based directors, it was found that the transactions were engineered by its UK parent company. Whilst it should be noted that the backdrop to the case was one of tax avoidance, with the transactions undertaken by the Jersey companies being uncommercial, it does highlight the possibility of its findings being more widely applied, to increase the risk and uncertainty for non-UK incorporated companies seeking to remain outside of the remit of HMRC.
If you would like advice, please contact Andrew Wilson, Partner on 01788 539000.