The following Corporation Tax guidance note Produced by Tolley in association with Anne Fairpo provides comprehensive and up to date tax information covering:
This guidance note outlines the three main tax considerations when a UK company makes an acquisition outside the UK, which are:
structure, ie whether to establish a new subsidiary to make the acquisition
finance, ie whether to fund the new subsidiary with debt or equity
whether to acquire assets or shares in the target business
The same considerations will apply when a foreign company makes an acquisition of a UK business.
There are a number of different structures which a company can use to acquire a target business in another country. These structures are similar to those which are used when setting up a new business in another country.
See the Introduction to setting up overseas ― companies and Setting up overseas ― branch or subsidiary guidance notes.
This structure will exist if:
the acquiring company buys shares in the target company
the acquiring company establishes a new subsidiary to acquire assets of the target business
Diagram 1 ― subsidiary ― share acquisition:
Diagram 2 ― subsidiary ― assets acquired:
If a new subsidiary is established, this can be funded with debt or equity (see below).
A subsidiary can be tax efficient if the rate of tax in the subsidiary is lower than the rate of tax in the acquiring company. The profits of the target business will be subject to tax in the subsidiary in the first instance. Subject to the controlled foreign company rules, the profits of the subsidiary may never be subject to tax in the acquiring company if dividends paid to the acquiring company are exempt from tax.
See the Distributions and Controlled foreign companies (CFCs) guidance notes.
This structure will exist if the acquiring company buys assets of the target business and a permanent establishment is created as a result.
Diagram 3 ― branch:
The profits of the branch may be taxed in both the target jurisdiction and the acquiring company. If the acquiring company were a UK company, the profits of an overseas branch may be exempt from UK tax
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Terminal loss relief for trade losses in the final 12 monthsTrading losses incurred by a company in the final 12 months leading up to the discontinuance of trade may be carried back for up to three years from the period beginning immediately before that 12-month period. So if the final accounting
Normal due dateSmall companies (including marginal relief companies) are required to pay all of their corporation tax ― nine months and one day ― after the end of the chargeable accounting period.For example, where a chargeable accounting period ends on 31 December 2018, the due and payable date for
Many people work from home either on an informal or a full-time basis. These people can be employed or self-employed, and their employment status affects the expenses they can claim as a deduction from their earnings.When dealing with someone working from home, it is important to remind him that
Duty to prepare trust accountsUnder the laws of England and Wales, trustees have a duty to account to the beneficiaries for their financial administration of the trust fund. This duty is established by a substantial body of case law. In the case of Armitage v Nurse, Millett LJ stated:“Every
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.