Basic principles

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Who pays corporation tax?

Corporation tax is payable by 'companies', which includes any body corporate and unincorporated associations.

A company that is tax resident in the UK is generally subject to UK corporation tax on its worldwide profits. A company that is not tax resident in the UK may still be subject to UK corporation tax in certain circumstances, including:

  1. •

    (for disposals of UK land on or after 5 July 2016) in respect of profits from a trade of dealing in or developing UK land (for more information, see Practice Note: Profits from trading in and developing UK land (transactions in UK land))

  2. •

    if it carries on a trade (other than a trade of dealing in or developing UK land) in the UK through a permanent establishment (PE), in which case it is subject to UK corporation tax in respect of the profits attributable to its UK PE (for more information, see Practice Notes: What is a UK permanent establishment? and How is a UK permanent establishment taxed?)

  3. •

    if it disposes (directly or indirectly—this includes a sale of shares in a property

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Latest Tax News

Tax weekly highlights—5 February 2026

This week's edition of Tax weekly highlights includes: (1) completion of the House of Commons committee stage of Finance Bill 2026, (2) second reading of the National Insurance Contributions (Employer Pensions Contributions) Bill in the House of Lords, (3) analysis of the Court of Appeal’s decision in FS Commercial Ltd v HMRC concerning failure to produce VAT invoices to support claims for input tax deductions, (4) analysis of the Upper Tribunal’s decision in Mark Glenn Ltd v HMRC concerning the scope of the VAT zero rate for supplies to disabled persons of services of adapting goods to suit their condition, and (5) analysis of the First-tier Tax Tribunal’s decision in Hall v HMRC concerning a challenge to a joint and several liability notice under the anti-phoenixing rules in Schedule 13 to the Finance Act 2020.

UT decides that severe hair loss in women constitutes a disability for VAT zero rating purposes (Mark Glenn Ltd v HMRC)

Tax analysis: In Mark Glenn Ltd v HMRC, the Upper Tribunal (UT) decided that supplies to women suffering hair loss could be zero rated under Group 12 Item 3 of Schedule 8 to the Value Added Tax Act 1994 (VATA 1994), as severe hair loss in women constituted a disability.

FTT finds HMRC validly assessed taxpayer to CGT and penalties as a UK resident (Kearney v HMRC)

Tax analysis: In Kearney v HMRC, the First-tier Tax Tribunal (FTT) held that the taxpayer was a UK-resident for tax purposes, applying the common law principles applicable before the introduction of the statutory residence test in 2013. The FTT also upheld HMRC’s discovery assessments and, subject to a reduction in quantum, penalty determinations.

Court of Appeal decision highlights the importance of VAT invoices for input tax claims (FS Commercial Ltd v HMRC)

Tax analysis: In FS Commercial Ltd v HMRC, the Court of Appeal upheld earlier decisions of the First-tier Tax Tribunal (FTT) and the Upper Tribunal that HMRC was entitled to refuse the appellant’s claim for input tax because the appellant had failed to produce VAT invoices when requested by HMRC.

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