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HMRC internal manual

International Manual

Non-residents trading in the UK: Returns and assessments outside normal time limits: Returns - Corporation Tax

Whether the non-resident trades through a permanent establishment, it is important that return notices are issued to the appropriate person at the appropriate place and at the appropriate time. In some circumstances you may need to issue return notices to both the non-resident company in its own name and to the UK dependent agent. The latter will have to be set up separately on COTAX or ITSA where that is required, e.g. to force a response when the non-resident has little physical presence in the UK. If we are arguing the non-resident trades through a fixed place of business permanent establishment then the notice to make a return should be issued to the non-resident at the permanent establishment address, unless, unusually, we do not yet have a definite address for the UK branch, in which case the notice can be sent to the overseas address of the non-resident.

In general the same CT provisions at FA98/SCH18 apply to non-residents within the charge to UK tax as apply to UK residents. There is no statutory time limit within which a notice to deliver a return under FA98/SCH18/PARA3 must be issued. But as a company cannot self -assess after the normal time limits for assessment, no effect could be given to any self-assessment made by a company in its return if the latter was received more than 4 years after the end of the accounting period.

It is important to issue notices to deliver a company tax return in plenty of time to allow consideration of the return if received or to make a determination if necessary. The return is to enable a company to self assess the tax payable. We will not issue an ITSA return for a year that will be out of time for assessment by the filing date. The same principles apply for CTSA notices to deliver a return to a non-resident company.

For a notice to deliver a return that is issued at any time up to 9 months after the end of the accounting period, the filing date will be defined by FA98/SCH18/PARA14(1)(a) to FA98/SCH18/PARA14(1)(c). If the notice requiring the return is served later than that then the filing date is 3 months from the date when the notice was served (FA98/SCH18/PARA14(1)(d)). 

If a non-resident company fails to make a return the usual remedy is a determination under FA98/SCH18 PARA36.

Returns - Income Tax

It should not be forgotten that, if there is no treaty restriction on our taxing rights (i.e. a permanent establishment article in a double taxation agreement) a non-resident company may still be within the charge to income tax if its presence does not meet the PE threshold, because for income tax we only have to establish that there is a trade carried on here under ITTOIA05/S6(2) (for periods from 2005/6)..

It will then be necessary to issue ITSA return notices to the UK representative of the company (ITA07/S835E) bearing in mind the exceptions listed in ITA07/S835G to S835K, such as agents that are not regular agents. Where there is no permanent establishment the UK representative is likely to be an agent (even though the agent PE requirements of CTA10/S1141(1) are not met) but could be the non-resident company itself if it has a branch or some other presence here. If a return notice is to be issued to an agent of the non-resident the agent has to be set up under a separate ITSA reference to any that it has to make ITSA returns on its own behalf. The notice to make a return should be addressed to “X as agent of the non-resident”.

The normal ITSA extended time limit rules apply to income tax return notices (seeSALF207 onwards).

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)