Non-resident companies: income tax or corporation tax?

Clients often ask us a very common question.  When does a non-UK resident company pay income tax and under what circumstances would it have to pay corporation tax? 

A non-resident company will pay income tax at the basic rate if:

1.  If it is not trading in the UK through a Permanent Establishment (PE) but has income arising in the UK; or

2.  If it is trading in the UK through a PE, but has income arising in the UK which is not connected to a PE through which the trade is carried out.

On the other hand, income from and connected to a trade which a non-resident company carries on through a PE in the UK will be subject to corporation tax and not to income tax.

Often the difference can be subtle and complex and RKG Consulting will be pleased to advise clients whether such non-resident companies should register for income tax or for corporation tax.  We will also be pleased to provide tax return preparation and tax compliance services and to undertake all necessary dealings with the UK tax authorities.