The following Corporation Tax guidance note by Tolley in association with Robert Langston of Saffery Champness 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:
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 and Setting up overseas ― branch or subsidiary guidance notes.
This structure will exist if:
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
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