Syllabus A4. Corporation Tax A4d. The corporation tax liability

A4div. Overseas company trading in the UK

Syllabus A4div)

Advise on the tax position of overseas companies trading in the UK

Foreign companies trading in the UK

Tax position

A non-UK resident company can be liable to UK C.T. on trading profits if it trades within the UK, but not for trading with the UK.

C.T. is usually charged at the UK rate of 19% unless there is a double taxation treaty specifying a lower rate.

  1. Trading within the UK means either trading through a permanent establishment or concluding contracts in the UK.

  2. Trading with the UK means activities such as exporting goods to UK customers, storing goods in the UK for customers and advertising and marketing activities in the UK.


M Inc is a large company resident in India. 

It manufactures mobile phones in India and sells them through a UK based agent. 

On 01/12/18 M. Inc rented a showroom and an office in London, with 2 sales managers. 

Will M. Inc. be liable to pay UK C.T. on it's trading profits?

  • Solution

    They will be liable to pay UK C.T. on their trading profits from 01/12/18 because this is when they started to trade within the UK. 

    Before this, they were trading with the UK.