CTM34240 - Residence: non-resident companies: charges paid

ICTA88/S7 (1) states that no payment made by a company resident in the UK is to be treated as paid out of profits or gains brought into charge to IT ( CTM35210). This rule does not apply to non-resident companies.

A non-resident company may still be within the charge to IT in respect of certain income ( CTM34220) and any 'charges' (other than interest) which it pays out of such income are within ICTA88/S348. Where the company is also chargeable to CT on the profits of a branch or agency, such a payment cannot be treated as a charge under ICTA88/S338 (1) so that double relief is prevented.

If a non-resident company makes payments within ICTA88/S349, not out of its profits or gains charged to IT, it must deduct and account for IT. The machinery of Section 349 or ICTA88/S350 must be used for this because ICTA88/SCH16 does not apply to non-resident companies.

If a non-resident company makes a payment within Section 349 on or after 1 October 2002, the obligation to deduct IT may be switched off by FA02/S94, see CTM35215.