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HMRC internal manual

International Manual

HM Revenue & Customs
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Non-residents trading in the UK: 'Machinery' provisions for assessment and collection via UK representatives: Extent of UK representative's liability

Under TIOPA10/ Sch6 Paragraphs 18-20 and 28-30 (old FA95/Sch23/Paras 1-3) for income tax and CTA10/S970 - S971 (old FA03/S150(3)-(4)) for corporation tax the non-resident and the UK representative both have a personal responsibility for all matters relating to the assessment of tax and to the collection and recovery of tax. For example, their responsibilities include all the mechanisms of Self Assessment, including notification of chargeability, the obligation to make a tax return and self assessment, liability to make interim and final payments of tax, and liability to surcharges, interest and penalties in connection with those obligations and liabilities.

The UK representative can only be obligated in respect of liabilities, on chargeable profits under CTA09/S5(2) (old ICTA88/S11) for corporation tax or liabilities on chargeable income and gains under ITTOIA05/S6(2) for income tax, or TCGA92/S10 for capital gains tax from or connected with the UK permanent establishment / branch or agency. So the liabilities on the UK representative can only arise where there is a domestic charge to tax on the non-resident because the domestic charge requires there to be some personal presence in the UK (see INTM262000).

Either party is able to discharge the obligations and liabilities arising, but equally any acts or omissions of the non-resident are treated as acts or omissions of the UK representative (but see also INTM268050 in relation to the limited responsibilities of an independent agent acting in the ordinary course of his business).

A person can only be the UK representative in respect of the permanent establishment / branch or agency with which they are linked. Where a non-resident has more than one UK permanent establishment / branch or agency, then it is possible that each will have a different UK representative. In those circumstances, each UK representative would only be responsible in respect of the part of their non-resident’s liabilities and obligations arising from their own permanent establishment / branch or agency [Neilsen Andersen & Co v Collins, & Tarn v Scanlan 13TC91].

Where the trigger for an obligation or liability is the receipt of formal notification, then the obligation or liability only falls on the UK representative once they have received the relevant notification. The legislation actually stipulates that the UK representative must have been given or served with a notice or other document (or at least has received a copy of the notice or document) and have received a request or demand (or at least have been notified of a request or demand).

The UK representative retains liability for any amounts assessed upon them, for periods whilst they were the UK representative, even after they have ceased to be the UK representative.

UK Investment Income

Although non-residents are chargeable to UK tax on sources of investment income arising in the UK, that investment income is taxed principally through deduction at source. The ITA 2007, ITTOIA 2005, and CTA 2010 machinery provisions limit the tax chargeable on investment income to the income tax, if any, deducted at source. Assuming therefore that tax has been deducted at source there should be no need to assess a UK representative of the non-resident in respect of the non-resident’s UK investment income.