Corporation Tax

Company residence and permanent establishment issues from coronavirus (COVID-19)

Produced by Tolley
  • 23 Mar 2022 11:04

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Company residence and permanent establishment issues from coronavirus (COVID-19)
  • Permanent establishments

Company residence and permanent establishment issues from coronavirus (COVID-19)

With directors of companies potentially stranded abroad due to coronavirus (COVID-19), but business still needing to continue, board meetings may be held with directors joining remotely. This could potentially impact on where the central management and control (or effective management) of those companies is located.

While most UK incorporated companies are resident in the UK regardless of the location of central management and control, a few companies that are usually UK resident (for example, those incorporated outside the UK but managed in the UK) still fall under the central management and control case law test for residence.

Central management and control is often a question of fact and will depend on a number of criteria. A significant factor in assessing this test can be the location of board meetings. However, HMRC guidance at INTM120130 indicates that while the site of board meetings is important, it is not determinative. Indeed, INTM120140 and INTM120150 reflect HMRC’s view that occasional UK board meetings, or participation in such meetings from the UK, does not necessarily result in central management and control abiding in the UK. A summary of HMRC’s approach to company residence in response to the coronavirus pandemic is set out at INTM120185.

It should therefore be considered on a case-by-case basis whether a director not situated in the UK at the time of the meeting should join a particular board meeting and ensure that the chair of the meeting is in the UK. Similar considerations

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