Commentary

D4.103 Determination of corporate residence for UK tax purposes

Corporate tax
Corporate tax | Commentary

D4.103 Determination of corporate residence for UK tax purposes

Corporate tax | Commentary

D4.103 Determination of corporate residence for UK tax purposes

The residence status of a company is determined for an accounting period. For this purpose a new accounting period begins when the company becomes resident in the UK and an accounting period ends when the company ceases to be so resident1.

A company is resident in the UK if:

  1.  

    •     it is incorporated in the UK, known as the 'statutory test' or 'incorporation rule'2, or

  2.  

    •     the central management and control of its business is in the UK (see D4.104), the meaning of which derives from case law, hence being referred to as the 'case law test'. It is directed at the highest level of control of a company's business, being a question of fact who exercises this control and where it is exercised

If a company is incorporated in the UK, then it is resident in the UK and it is not necessary to consider where it is centrally managed and controlled.

Incorporation rule

The incorporation rule (or 'statutory rule') was introduced with effect from 15 March 1988. Prior to that, only the case law rule of central management and control (see D4.104) was used to determine corporate residence.

The rule provides that all companies incorporated in the UK are regarded for the purposes of the Taxes Acts as automatically UK resident3.

Indefinite exception—Treasury consent

Companies that qualify for an indefinite exception to the incorporation rule are companies that:

  1.  

    •     migrated with special Treasury consent after 15 March 1988 and that carried on business at any

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