CG42040 - Residence and migration: non-resident companies with no UK permanent establishment

A company that is

• not resident in the UK
• does not carry on a trade in the UK through a permanent establishment
• does not change its residence status during a year of assessment

is not chargeable to either Capital Gains Tax or Corporation Tax on chargeable gains for any gains arising in accounting periods falling in that year of assessment.

This is because if a company is not resident in the UK CTA09/S5 (2) removes the company from the charge to Corporation Tax unless it is carrying on a trade in the UK through a permanent establishment. As the company is not within the charge to Corporation Tax we have to consider whether it is within the charge to Capital Gains Tax. When a company is not resident in the UK we treat it as also being not ordinarily resident in the UK. As the company is therefore neither resident nor ordinarily resident in the UK it does not satisfy the conditions in TCGA92/S2 for being chargeable to Capital Gains Tax. Thus such a company has no liability in respect of chargeable gains realised during such a year of assessment as it is outside both the charge to Corporation Tax and the charge to Capital Gains Tax.

Non-resident companies with a UK permanent establishment

A non-resident company that carries on a trade in the UK through a permanent establishment is within the charge to Corporation Tax in respect of disposals of assets situated in the UK and associated with the trade or with the permanent establishment, see CG42100+ for further guidance.

Gains arising from other assets are not within the charge to Corporation Tax and again we should consider whether they are within the charge to Capital Gains Tax. For the same reasons as set out above for non-resident companies with no permanent establishment, these gains are also not within the charge to Capital Gains Tax. Thus for such a company the only charge is a charge to Corporation Tax on gains relating to assets associated with the trade carried on in the UK through the permanent establishment or associated with the permanent establishment.

Companies migrating or becoming treaty non-resident

Where a company changes its residence status see CG42300+.