Case Study 4 – Company Residence Review

We were approached by the client’s accountant to provide a technical understanding of the rules for permanent establishment when expanding overseas. We also had to consider whether it was better to set up as a branch of the UK Company or a separate wholly owned subsidiary of the UK company. As a consequence, we had to consider the local taxes to be paid as well as ensuring central management and control remained offshore.

Central management and control is a concept which has been developed through the courts so that even if the company is not incorporated in the UK, HMRC may argue that it is still subject to UK taxation. We assisted the client to reduce the risk of challenge and inserted a number of “control tests” to ensure the management remained offshore.

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