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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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Residence: inward company migration: deemed commencement - specific points

A company that becomes resident in the UK is within the charge to CT. Prior to *30 November 1993 *this was so even where residence was awarded to another country for the purposes of a Double Taxation Agreement. An accounting period begins and no relief is available for losses incurred by the company before it comes within the charge to UK tax. If the company is a trading company then, unless it was previously trading in the UK through a permanent establishment/branch or agency (see INTM264090), the provisions of CTA09/S41 apply (see CTM02100). The effect of these may not be clear in a number of situations, for example:

  • The company may claim that on the deemed commencement under CTA09/S41 (2)(a) the normal principles of stock valuation do not apply. It may attempt to value opening stock at the ‘higher’ original cost rather than the ‘lower’ net realisable value.
  • The company may claim that capital allowances for plant and machinery should be calculated by reference to the ‘higher’ original cost rather than the usually accepted market value.
  • The company may claim that the deemed commencement under CTA09/S41 (2)(a) entitles the company to relief for pre-trading expenditure under CTA09/S61.

In the event of any claim of this sort or on any other problem arising on the inward migration of a company submit the file to CTIS (Technical) - see ‘Technical Help’ on the left bar.