Companies moving offshore can expect years of uncertainty
HMRC is, perhaps understandably, not in favour of UK companies seeking to minimise tax bills by locating abroad. It appears that HMRC are planning to keep a watchful eye for years to come to be sure that senior management decisions have genuinely relocated.
Whilst it is crucial that board meetings are held outside Britain among non-resident directors, the problem is that a company could be deemed UK-resident if evidence – potentially including travel schedules, emails, diary entries and notes of phone calls – suggested key decisions were taken in the UK.
Emigrating companies will need to keep meticulous evidence to support their assertion that their 'central management and control' has moved outside the UK. Even if their records are exemplary, any investigation into whether a company has genuinely moved its residence could lead to exhaustive and time consuming scrutiny.
In reality there was always an expectation that HMRC would take a tough approach, but now this has been confirmed.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Cathy you can call her on 01908 605552.
Date: 20th November, 2009
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