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HMRC internal manual

International Manual

HM Revenue & Customs
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Company residence: when HMRC will not usually review residence: introduction


Case law states that a company is resident where its real business is carried on, where it really keeps house and does business - that is where the central management and control of its business actually abides (INTM120060).

In many cases the board of directors will meet where the company is resident and the location of those meetings may well be an important factor in the determination of the place where the real business is carried on, but there is no rule of law that equates the two.

The necessity of establishing a common standard for the treatment of different companies meant that the Courts were bound to arrive at a general principle to form an acceptable test of residence. As was noted in Bullock v Unit Construction Co Ltd, 38TC712, such a rule

might have taken a variety of forms - the country of incorporation, the site of general meetings, the site of meetings of the directors’ board were all possible candidates for selection as the criterion. In fact, as we know, the principle was adopted that a company is resident where its central control and management abide…

There is therefore no assumption that central management and control must be found where the directors meet.

A residence rule based on the location of board meetings would not be without difficulties: where is the central management and control when the board is not meeting? What if the board does not habitually meet in any one country or if its meetings are composed of members participating from different countries? What if the board exercises its powers to manage and control in a formal sense only, merely executing either instructions from another person or body or decisions made prior to the meeting?

The cases also show that central management and control may be divided between two or more locations, but the courts have yet to set out a general rule applicable to such situations (INTM120060) and until they do there will be uncertainty for companies and for HMRC.

This section of the manual provides some examples of the situations in which HMRC will not usually seek to demonstrate that a company is resident in the United Kingdom.