Mixed member partnerships and international aspects: Residence and the tax consequences: Non-resident company members not trading in the UK
A non-resident company that does not trade in the UK through a permanent establishment will be liable to income tax on UK source non-trading income. In this situation, the non-resident company must self assess its income tax liability using an SA700 tax return; guidance is available on the HMRC internet site here. Within HMRC, the affairs of such companies are dealt with by Personal Tax International.
An example of when this would apply in a partnership context is where a non-resident company is a member of a UK property investment partnership. The Non-Resident Landlords Scheme will apply - guidance on this can be found at INTM370000 onwards. Clerical guidance in relation to the setting up of such taxpayer records is available at SAM100120.
It should be noted that the requirement to declare income tax liability on an SA700 return may also apply to a non-resident company that trades in the UK through a permanent establishment. If the company has UK source non-trading income that is not attributable to the permanent establishment, in addition to returning its trading profits arising from the permanent establishment on a corporation tax return, it will also need to file an SA700 return in respect of its non-trade income that is not connected to the permanent establishment.
The SA700 return is also used in the situation of a non-resident company trading other than through a permanent establishment in the UK where there is no exemption from UK tax under a double taxation agreement and the company is liable to income tax on income from that trade. This is unusual in practice.
In all cases, it is important that the company’s SA record is linked to the record for the partnership of which it is a member.