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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: Ireland: Business profits and subcontractors

An enterprise of Ireland is chargeable to United Kingdom tax only on profits attributable to a permanent establishment which the enterprise has in the United Kingdom (Article 8). With effect from 6 April 1999 (1 April 1999 for Corporation Tax purposes), only where a building site or construction or installation project lasts for more than six months may it be considered to be a permanent establishment. A subcontractor who is a resident of Ireland carries on an Irish enterprise, but in practice a labour only subcontractor working in the United Kingdom should not normally be regarded as having a permanent establishment here unless there are exceptional circumstances, for example he has a separate office apart from the main contractor’s site.

A claim for exemption from United Kingdom tax on business profits, including income as a subcontractor, should only be admitted where the taxpayer has provided a statement from the Irish Tax Authorities to the effect that he was a resident of Ireland for Irish tax purposes during the period for which a claim has been made.

Exemption from United Kingdom tax on profits does not confer exemption from the operation of the construction industry deduction scheme which applies to all concerns operating on construction industry contracts in the UK (see CISR42130).