Accredited individuals and 2012 Partner workers: Business profits exemption

There is a temporary exemption from UK Corporation Tax and UK Income Tax for certain non-resident companies that engage in Games-related activities or provide services for the delivery of the London 2012 Games.

The presence of their employees in the UK during the official accreditation period, will be ignored when considering whether a non-resident company has been in a place in the UK long enough to create a permanent establishment for UK taxation purposes. For those providing timing, scoring, and on-venue result services, the period ignored is 1 January 2011 to 31 December 2012.

The non-resident company may still have to pay tax on the income or gains in question in its home country, particularly if that state does not exempt the profits of a foreign permanent establishment of the company.

On this page:

Who qualifies for the temporary exemption?

If you are a non-resident company that employs accredited non-residents temporarily in the UK to perform an official function at the London 2012 Games,

Or

You employ London 2012 Partner workers to enable a London 2012 Partner to provide services specifically for the purpose of delivering the Games

You will qualify for this exemption.

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Accredited individuals - definition

For the purpose of this exemption, an accredited individual is a non-resident employee that meets the following criteria:

You hold an Olympic Identity & Accreditation Card or a Paralympic Identity & Accreditation Card as issued and validated by the London Organising Committee of the Olympic Games and Paralympic Games Limited (LOCOG).

and

that accreditation card has been granted to you in relation to your official function at the Games as either:

(a) a competitor
(b) a media worker (including journalists, technicians and producers)
(c) a representative of an official Games body
(d) a service technician
(e) a team official of a National Olympic or Paralympic Committee
(f) a technical official (including judges, referees and classifiers).

Find out more about the official functions for accredited individuals in the detailed guide below

Definition of official functions for the London 2012 Games

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What is a London 2012 Partner?

For the purpose of this exemption a London 2012 Partner is an organisation (known as a Commercial Delivery Partner) that is supplying services to LOCOG in return for the right to market and advertise themselves or their products for commercial purposes by reference to their association with the Games. It includes a company connected with the Commercial Delivery Partner.

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What is a 2012 Partner worker?

For the purpose of this exemption a 2012 Partner worker is:
a non-resident that is

  • employed by a London 2012 Partner, or
  • holds an accreditation card, and is:
    • directly contracted to work for a London 2012 Partner, or is
  • employed by a person that is directly contracted to work for a London 2012 Partner;

a resident or non-resident that is

  • employed by a London 2012 Partner, or its direct contractor, or is directly contracted by a London 2012 Partner, to provide timing, scoring or on-venue result services.

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What is a permanent establishment for UK tax purposes?

When considering if a non-resident company is chargeable to UK Corporation Tax HMRC consider whether it is trading in the UK through a 'permanent establishment'.

A permanent establishment in the UK exists when business is carried on from a distinct fixed place (for example an office, or a studio) for a minimum of 6 months.

If your business is non-resident in the UK and you are in the UK temporarily for a period of less than six months, you will not have a permanent establishment here and do not have to pay UK Corporation Tax.

Find out more about permanent establishment in the HMRC International Tax Manual

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How does the permanent establishment exemption work?

For tax purposes, HMRC will ignore the presence in the period 30th March - 8th November 2012 of employees of non-UK resident companies that carry out an official function or work for a London 2012 Partner and fall within the categories outlined above. This means the non-resident companies will not be seen as having a permanent establishment for UK tax.

In the case of London 2012 Partners and their direct contractors that provide timing, scoring or on-venue result services it does not matter whether the employees are resident or non-resident. The period that is disregarded for the purpose of determining whether those companies have a permanent establishment runs from 1 January 2011 to 31 December 2012. This is because the period of preparation prior to the Games requires them to be present much longer than other London 2012 Partners.

This means the employer (the non-resident company) will not have to pay UK Corporation Tax on income it earns from carrying out the official function or functions for which its employees received accreditation, or for providing the services for the delivery of the Games.

Similarly, income received by a non-resident company for carrying out the activities that are disregarded for permanent establishment purposes in the period 30 March to 8 November 2012 is also exempt from Income Tax even when there is no double taxation agreement in place between the territory in which it is resident and the UK.

Find out more about double taxation agreements

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What is not exempt?

If a non-resident company carries on both Games-related and non-Games related activities at the same location only the Games - related activities are ignored for the purpose of determining whether there is a permanent establishment. Therefore, the exemption from permanent establishment may not apply if the non-resident company would otherwise have a permanent establishment at that location, for example, because its employees are present there and carrying on non-Games related activities for more than 6 months; in that case all of the income earned by that permanent establishment will be within the charge to corporation tax.

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Contacting HMRC

If you have an enquiry that concerns the exemption for businesses (permanent establishment) that your adviser has not been able to answer you can contact HMRC on Tel. 020 7147 2655.

If you are calling from outside the UK dial +44 20 7147 2655.

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