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HMRC internal manual

International Manual

Company residence: treaty tie-breakers and self-assessment

The general principle is that a company must make a self-assessment of its residence status. This may result for example, in

  • no CTSA return being considered necessary on the basis that the company is not resident in the UK (assuming that liability arises in no other way, e.g. through a permanent establishment), or
  • a return being submitted by a foreign incorporated company on the basis that it is resident in the UK.

A dual resident or potentially dual resident company should comply with its obligations under the self-assessment regime in the ordinary manner. Whilst it may wish to seek a bilateral determination of its residence status under a tie-breaker provision it should not, for instance, delay submitting returns whilst such a determination is in progress.

Where the relevant treaty has a non-standard tie-breaker the company will need to self-assess the location its place of effective management. Where the tie-breaker depends on agreement between the Competent Authorities the company will need to make a self-assessment based on relevant information, including any criteria set out in the treaty or related documents. In such cases the self-assessment will be subject to the outcome of discussions between the Competent Authorities.

Clearly, where a company wishes to achieve certainty regarding its residence status it will need to make representations to the relevant tax authorities. However negotiations between the authorities are not contingent on such representations being made nor on an application under CTA09/S18 (see INTM120070).