Non-resident companies and UK tax on chargeable gains

Non-UK resident companies are still outside the territorial scope of UK corporation tax on chargeable gains. This is provided that the company does not have a UK permanent establishment. Exemption applies even when the underlying assets are situated in the United Kingdom – including UK real estate.

However, we anticipate that HM Treasury and HM Revenue & Customs (HMRC) will be looking more closely at, and challenging, the residence status of overseas incorporated companies with a UK connection.

Lately HMRC has been less inclined to negotiate with errant taxpayers and may be keen to redress the balance following recent defeats in high-profile tax residence cases involving overseas incorporated companies. This is particularly likely in the current economic climate, where diminished revenues are squeezing the Government's general tax-take and demands for action against perceived tax avoidance grow louder.

It is, therefore, vital that an overseas incorporated company is carefully and properly established, managed and controlled if it is successfully to escape the United Kingdom's tax net.

Wragge & Co's experts provide further information for non-resident companies and UK tax on chargeable gains.