The established test for company non-residence has evolved as modern working practices have changed.

  • A company which is incorporated outside the UK will become UK resident if its central control and management is based in the UK.
  • The rule of thumb for tax planners has therefore been to ensure that all board meetings, decisions and resolutions are made offshore, illustrated in Wood v Holden [2006] STC 443.
  • In Laerstate BV v HMRC [2009] UKFTT 209 (TC) the FTT decided that company residency cannot be established on such simplistic terms as Wood v Holden and looked at where the company was conducting its real business, including contract negotiations and obtaining its advice. 
  • The 2017 case of Development Securities (No9) Ltd v HMRC took investigation of 'real business' a step further: a Jersey company was held to be UK resident on the basis that it undertook transactions (part of a capital loss scheme) that were engineered by its UK parent. This supports the idea that the whole picture must be considered when considering company residency.

In the global economy business can be conducted on smart phone or computer from anywhere in the world. It is also quite easy to track the location of a sender of any electronic communication or text. 

Businesses who are keen to stay offshore should have clearly defined policies in place to determine how and when their management business is conducted, see our detailed guide Companies and trusts: residence and permanent establishment.




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