Q&As

Can a non-UK incorporated company have a UK taxable presence if it has an employee operating in the UK?

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Published on LexisPSL on 05/11/2020

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • Can a non-UK incorporated company have a UK taxable presence if it has an employee operating in the UK?
  • Risk of UK tax residence
  • Risk of having a UK permanent establishment
  • Fixed place of business
  • Agent
  • Potential other UK tax liabilities of non-UK companies

Can a non-UK incorporated company have a UK taxable presence if it has an employee operating in the UK?

Whether a single employee working in the UK for a non-UK company could give rise to a taxable presence for the non-UK company is considered below.

Risk of UK tax residence

If the non-UK incorporated company is centrally managed and controlled in the UK—ie if the strategic decision-making relating to the company takes place in the UK—the company is UK tax resident under UK domestic law (unless, in accordance with a double tax treaty, it is treated as tax resident outside the UK). A UK tax resident company is generally subject to UK corporation tax on its worldwide profits.

Often, a company is centrally managed and controlled by its board of directors (since they are normally the ones that make the strategic decisions) and this takes place where their board meetings are held. However, as case law has shown, who in fact takes such strategic decisions and where they take them, and therefore where a company is centrally managed and controlled, is a question of fact. The board of directors may end up making decisions from the UK, maybe even taking such decisions outside their meetings. And, it may not always be the board of directors who take the strategic decisions despite the power given to the board under

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