Commentary

D4.104 Company residence and the case law test

Corporate tax
Corporate tax | Commentary

D4.104 Company residence and the case law test

Corporate tax | Commentary

D4.104 Company residence and the case law test

The tests to be applied in determining the residence of a company incorporated outside the UK for UK tax purposes have evolved through the courts in a number of cases, the more important of which are summarised below. The principle was established that a company was resident in the place where its central management and control was exercised, often referred to as (the 'case law test').

Following the introduction of the incorporation rule (see D4.103), the case law rule has a more limited application, as follows:

  1.  

    •     in determining residence where a company incorporated in the UK qualifies for the exception to the incorporation rule (see D4.103) and the central management and control is outside the UK1, or

  2.  

    •     in determining the residence of a company registered or incorporated outside the UK

Practical implications of the case law test

HMRC regard the question of where a company's central management and control is exercised as being essentially one of fact, but more detailed guidance as to its interpretation of the case law test is given in a statement of practice2.

Despite Wood v Holden and News Datacom (see below), HMRC does not regard the place where the board of directors meet as being decisive. If control is in fact exercised by a single individual, the place of residence of the company will be the place where that individual exercises their powers.

Where there is doubt about a company's residence status, HMRC's approach is to ascertain firstly

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