In a response which echoes many of the key points put forward by the CIOT (Tax Journal news, Issue 1560) the Law Society welcomes the corporate re-domiciliation proposals, which it sees as ‘part of an overall “package” which aims to make the UK a more attractive place in which to do business’. The Society also notes that the ‘commercial, regulatory and tax environment in the UK (and the stability of that environment) will be a key consideration in an overseas company’s re-domiciliation decision’.
The Law Society says that conditions for the regime must be clear, simple and objective, with businesses able to predict outcomes with a high degree of certainty and that the requirements for re-domiciliation should be ‘as similar as possible to those required for a new incorporation of a body corporate in the UK’.
The response also comments on the following:
On company residence, the Society ‘would welcome clarity on how inward and outward re-domiciliation are expected to impact on the UK corporate tax residence of a re-domiciling company’, particularly in cases where a company originally incorporated outside the UK and which has re-domiciled to the UK is thereby deemed to be ‘incorporated in the UK’. A favoured option would be to apply the existing residence tests to companies that re-domicile in either direction, ensuring that companies of similar current status are not treated differently in terms of tax residence.
On the risks posed by the potential importation of losses, any additional rules should be ‘appropriately targeted’ to address any specific and significant risks that have been identified. One such rule might address timing differences which could otherwise result in double deductions where, for example, losses are recognised in both jurisdictions.
On capital gains and intangible asset base costs, consideration should be given to allowing a market value step up in base costs in a ‘wider range of cases in relation to re-domiciliations that bring assets within the charge to corporation tax and/or result in a change of tax residence. Such a rule would bolster the attractiveness of the regime by helping protect companies re-domiciling to the UK from the risk of double taxation in two different jurisdictions.’
The response also considers the impact of the proposals on personal taxation for the owners of companies, the potential impact on transactions of stamp taxes on shares, and VAT and other tax considerations.
In a response which echoes many of the key points put forward by the CIOT (Tax Journal news, Issue 1560) the Law Society welcomes the corporate re-domiciliation proposals, which it sees as ‘part of an overall “package” which aims to make the UK a more attractive place in which to do business’. The Society also notes that the ‘commercial, regulatory and tax environment in the UK (and the stability of that environment) will be a key consideration in an overseas company’s re-domiciliation decision’.
The Law Society says that conditions for the regime must be clear, simple and objective, with businesses able to predict outcomes with a high degree of certainty and that the requirements for re-domiciliation should be ‘as similar as possible to those required for a new incorporation of a body corporate in the UK’.
The response also comments on the following:
On company residence, the Society ‘would welcome clarity on how inward and outward re-domiciliation are expected to impact on the UK corporate tax residence of a re-domiciling company’, particularly in cases where a company originally incorporated outside the UK and which has re-domiciled to the UK is thereby deemed to be ‘incorporated in the UK’. A favoured option would be to apply the existing residence tests to companies that re-domicile in either direction, ensuring that companies of similar current status are not treated differently in terms of tax residence.
On the risks posed by the potential importation of losses, any additional rules should be ‘appropriately targeted’ to address any specific and significant risks that have been identified. One such rule might address timing differences which could otherwise result in double deductions where, for example, losses are recognised in both jurisdictions.
On capital gains and intangible asset base costs, consideration should be given to allowing a market value step up in base costs in a ‘wider range of cases in relation to re-domiciliations that bring assets within the charge to corporation tax and/or result in a change of tax residence. Such a rule would bolster the attractiveness of the regime by helping protect companies re-domiciling to the UK from the risk of double taxation in two different jurisdictions.’
The response also considers the impact of the proposals on personal taxation for the owners of companies, the potential impact on transactions of stamp taxes on shares, and VAT and other tax considerations.
