CheckLists.Tax (beta)
B4: Receipt of income by a company
Residence
Exclusions from income tax charge for non-resident company on non-UK income
Trading income - ITTOIA 2005, s.6
Property income - ITTOIA 2005, s.269
Savings and investment income - ITTOIA 2005, s.368
Miscellaneous income - ITTOIA 2005, s.577
Employment income - ITEPA 2003, s.15
Pension income - ITEPA 2003, s.575
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Relief for non-resident company on UK income
Income tax liability of non-resident company is limited to tax deducted at source plus tax on income that is not disregarded company income.
Property income is not disregarded income.
Legislation: ITA 2007, s.815
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Commentary: Kessler, Chapter 50;
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Requirement for economic substance in certain jurisdictions
- E.g. Jersey
- High-risk IP companies presumed to fail substance test unless prove otherwise.
- Does not automatically lead to UK residence, but leads to exchange of information, penalties and potential striking off
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IR35​
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Transfer of assets abroad
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Motive defence
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Tax avoidance can include deferral or reduction
"[44] [The taxpayer] correctly accepted that there could be tax “avoidance” where tax was deferred or reduced; it was not necessary for the arrangements to produce the result that no tax was payable in any circumstance." (Davies v. HMRC [2020] UKUT 67 (TCC), Morgan J and Judge Andrew Scott)
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LLP/partnership income arising to company
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Mixed partnership reallocation to individual partner
- Profits can be reallocated even if they might be said to relate to a period when the individual was not a partner (Walewski, §31);
Legislation: ITTOIA s.850C to 850E.
Cases: Walewski v. HMRC [2021] UKUT 133 (TCC);
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Tonnage tax regime for maritime fleet companies ​
Summary
"[21]...shipping companies which elect into the tonnage tax regime pay corporation tax on their tonnage tax profits in place of corporation tax on the relevant shipping profits. In essence, under the regime, corporation tax is payable applying the normal rate of corporation tax on a deemed daily profit calculated by reference to the net tonnage of vessels operated by the shipping company. Tonnage tax is payable irrespective of the profitability of the trade associated with the operation of the vessels concerned and, in the case of otherwise profitable activity, tax payable under the regime will usually be significantly lower than tax payable on the profits of the trade." (Unicorn)
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Cases: HMRC v. Unicorn Tankships (428) Limited [2021] UKUT 109 (TCC);
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