Tax Resident Of UK (Company)

Determining the residential status of corporations is very challenging as many rules and judgments need to be considered.

Incorporation Rule

If a company has been incorporated in the UK it is automatically counted as a UK resident for tax purposes. Exceptions can be made if double taxation conditions may be applied to the company as a resident of a non-UK territory.

In most cases tax treaties of such type will include a tie-breaker clause that will determine the tax residence of a company. Such test will usually use the location of effective management as their main criteria.

Foreign incorporated companies

A company incorporated overseas can still be subject to taxation and be treated as a tax resident in UK if the central management resides in UK. However, if the tie-breaker clause conditions are met the company can be treated as a tax resident of a foreign state hence, a non-UK tax resident.

The corporate residence matter requires considerable care and professional advice, as the issues surrounding it are often quite pragmatic.

R&D Tax Relief

Research and Development Tax Relief is a form of corporate tax relief that may help in reducing the company’s tax bill. Such form of tax relief can only be claimed only if your company is liable for corporate tax

The way tax relief is claimed depends on the size of the company. Depending on whether the company is an SME or a Large company schemes will differ.

R&D projects that might qualify for relief

A company is only qualified to claim R&D Tax Relief if the project aims to achieve advancement in the overall knowledge and capability in the field of science and technology through resolving a specific uncertainty. The project must also be relevant to the area in which the company operates and own intellectual property that may arise from the project.

When filing the CT Return an explanation of each of the following must be given in detail:

  • project
  • advance in science or technology
  • science
  • technology
  • direct contribution
  • scientific or technological uncertainty

Costs that qualify for R&D tax relief

  • Employee costs
  • Staff providers
  • Materials
  • Payments to clinical trials volunteers
  • Utilities
  • Software
  • Subcontracted R&D expenditure
  • Capital expenditure

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