Can I Manage My UK Company Overseas?

Author: George Ian Hope BAcc(Hons), MSc(IT), FCCA, CGA, CPA
https://www.linkedin.com/in/gihope
Ian is a general practicing member of the Association of Chartered Certified Accountants with fellowship
status (FCCA). He is also a member of the Certified General Accountants Association of Canada (CGA),
and a member of Chartered Professional Accountants of Canada (CPA).

Can I Manage My UK Company Overseas?

This is a question we receive from many potential clients who request us to provide a quotation for services, and also from existing clients.

And the short answer is: Yes, it is possible (most things in life are!), but we would not normally recommend doing this, unless you have previously sought specialist tax advice in this area, and there are no other viable alternatives.

And that is because in order to do this correctly, you will most likely have to consider ALL of:

• the UK tax laws;
• the tax laws in the overseas country from which you plan to manage the UK company; and
• any tax treaties which handle the combined interaction of taxation between these countries.

With the exception of very large (and typically expensive) accounting practices which operate in more than one jurisdiction, and therefore can use the joint experience of experts in each of the countries in which they operate, most UK accountants will therefore not be able to provide effective overseas tax advice.

Therefore, if you choose to operate like this you may need to seek advice from more than one accountant. One in the UK, one in the country you plan to live and work, and potentially also further specialist tax advice to interpret how the tax treaties between these countries should be applied, and to manage any associated communications between you and HMRC and the overseas tax authorities.  And you will most likely also have to perform some additional research on your own to ensure that you can apply the advice you have received from these different parties correctly!

Nevertheless, it is still helpful to understand the rules that are in place so that you can act on an informed basis.  And those will be covered at a very high level below:

Company Residence

By default, companies which are registered in the UK (Scotland, England, Wales, and Northern Ireland) are treated as UK resident, and they are therefore subject to UK tax on their worldwide income and capital gains.

The only exception to this is where a company can demonstrate that there is a double tax treaty in place with another country, which exempts them from paying tax in the UK because they already pay tax overseas.

And regardless of residency status, UK companies must continue to submit annual financial statements to Companies House and associated Tax Returns to HMRC.

All UK registered companies must also have a UK registered office address (ROA), but it is possible to use the address of an agent (for instance your accountant) for these purposes, so this doesn’t directly impact the residency decision.

However, it is also possible for a UK registered company to be deemed to be resident in another country, where their “central management and control” is based in that country.

Central Management and Control

Central Management and Control isn’t specifically defined. Which can itself lead to additional uncertainty and complexity, because it depends on the specific circumstances which apply to your company.

But in summary it will depend on:

• the law which applies in the country in which your company is registered;
• what the constitution documents (articles and memorandum of association) of your company say; and
• where disputes arise, the court’s interpretation of the facts of the case based on previous case law.

If you are interested in researching this area in greater detail, HMRC have provided more specific guidance about this at the following locations:

• INTM120180 – Company residence: how to review residence
• INTM120200 – Company residence: Statement of Practice 1/90

In simplistic terms though, for smaller owner managed businesses it is where you are, as the person(s) who owns and manages the company.  So, if you move overseas, then there is a strong argument that the central management and control of the business has also moved overseas.  And this can lead to the company being deemed to also be overseas resident for tax purposes in the country you have moved to.

Multiple Residence

Where a company is resident in the UK by default by being a UK registered company and also deemed resident in another country by virtue of being controlled from within this country, then the interaction of taxes between these countries will be handled by a double taxation treaty (if one exists).

If no double taxation treat exists then the company may be subject to taxes in both countries!

Furthermore, even where a double taxation treaty does exist, the terms of these agreements can be quite different from country to country.

However, for guidance purposes the types of clauses included within these agreements typically include:

• “tie-breaker” clauses that dictate that a company is only subject to tax in the country where “central management and control” is exercised; and
• “mutual agreement” provisions which require the authorities in both countries to agree between themselves what treatment should be applied.

And mutual agreement of government bodies by its nature creates additional bureaucracy and uncertainty!

What We Typically Advise

We typically do not accept the appointment of new clients who plan to manage a UK company overseas, unless they have previously sought specialist tax advice in these areas.

Nevertheless, we do have specialist external tax advisers that we can refer potential or existing clients to, which they can then engage with directly, for the purposes of obtaining overseas tax advice.

For existing clients who may become non-UK resident by virtue of moving and working overseas, it is important that they also seek specialist external tax advice to determine whether the deemed residence of their company may also be impacted by these actions.

As a practical alternative, particularly where there is an expectation that the period for which they need to live and work overseas is not permanent, we often recommend that clients consider making their UK company “dormant” for the period they are overseas.  We can then continue to manage the dormant UK company on their behalf, until such time as they return to trade full time in the UK.

Where the client is considering moving overseas permanently or for extended periods of time it is often worth considering registering and using a company in the overseas country instead.  As by doing this you will avoid the need to consider the impacts of overseas taxation.

And ultimately the best way to avoid complexity in tax is to try to keep the way that you work as transparent and simple as possible!

Can QAccounting Help Me?

Yes, we aim to be the UK’s Premier Online Accountancy and Tax Accountant, and we are here to help you every step of the way, whether you need to understand the rules in greater detail or need advice about next best steps.

Please give us a call, email us, or contact us ONLINE to speak to a member of our Accounting team without delay!