CheckLists.Tax (beta)
P4. Company becoming UK resident
Test for being UK resident
- UK incorporated company always UK resident
- A company that is incorporated in the UK is UK resident for the purposes of the Corporation Tax Acts (CTA 2009, s.14).
- And only resident in the UK (s.14(2)).
Legislation: CTA 2009, s.14;
Cases:
HMRC manuals:
Commentary:
See also:
- Central control and management in the UK
General rule
- CTA 2009 does not defined corporate residence. It simply specifies that certain situations give rise to residence.
- Accordingly, outside of those situations, the common law test continues to apply.
- That holds that a company is UK resident if its central management and control (CMC) is in the UK (De Beers).
- The place where CMC is actually exercised, not where it should be (Unit Construction).
Board of director level control
-
Usurpation
- If the decision-making of the board of directors is usurped (e.g. by a parent company), CMC is exercised where the usurper(s) takes the decisions.
- "it is essential to recognise the distinction between cases where management and control of the company is exercised through its own constitutional organs (the board of directors or the general meeting) and cases where the functions of those constitutional organs are "usurped" - in the sense that management and control is exercised independently of, or without regard to, those constitutional organs". (Wood, §27)
- e.g. in Unit Construction, the parent company usurped the powers of the boards of the subsidiaries "which stood aside and did not meet at all".
Difference between influencing v. dictating
- "And, in cases which fall within the former class, it is essential to recognise the distinction (in concept, at least) between the role of an "outsider" in proposing, advising and influencing the decisions which the constitutional organs take in fulfilling their functions and the role of an outsider who dictates the decisions which are to be taken. In that context an "outsider" is a person who is not, himself, a participant in the formal process (a board meeting or a general meeting) through which the relevant constitutional organ fulfils its function." (Wood §27).
Legislation:
Cases:
De Beers Consolidated Mines v. Howe (1906) 5 TC 198;
Unit Construction Co Ltd v. Bullock [1960] AC 351
Esquire Nominees Ltd v Commissioner of Taxation (1971) 129 CLR 177
In re Little Olympian Each Ways Ltd [1995] 1 WLR 560
New Zealand Forest Products Finance NV v Comr of Inland Revenue [1995] 2 NZLR 357
Untelrab Ltd v McGregor (Inspector of Taxes) [1996] STC (SCD) 1
Wood v. Holden [2006] EWCA Civ 26;
HMRC manuals:
Commentary:
See also: SP 1/90;