CTM34250 - Residence: non-resident companies: charges received

If a non-resident company trading in the UK through a branch or agency receives a charge on income, the payment is income in its hands and is chargeable to CT and not to IT so far as it falls within the chargeable profits of the company ( CTM34210). The rules in ICTA88/S11 (3) for the set-off of any IT borne against the CT liability are similar to ICTA88/S7 (2) ( CTM35220). Taxed income within ICTA88/S11 (3) might include, for example, patent royalties received by a manufacturing concern, or interest on the reserve fund investments of the UK branch of a foreign bank.

Subject to the above, and to the provisions of any relevant Double Taxation Agreement, a charge on income received by a non-resident company is within the charge to IT, so far as it arises in the UK.