“Corporate emigration” could be challenged long after a move

UK companies locating abroad for tax purposes will be examined closely by HM
Revenue & Customs (HMRC) to ensure senior management activity has definitely
relocated, the
reported today.

Dave Hartnett, HMRC’s permanent secretary for tax, has warned that companies
relocating outside the UK to minimise their tax liability will be closely
examined and could be queried years after a move has taken place.

Exiled companies could still be deemed UK resident if evidence – for example
emails, diary entries and phone conversation notes – hint that management
decisions are taken within the UK, even if board meetings are held abroad.

Hartnett said: “Some companies claim to have changed their residence and left
the UK. Investigation and litigation in the UK will establish that.”

Lawyers have advised companies to keep detailed evidence that their “central
management and control” has relocated following HMRC’s signal of their intention
to take a tough line on corporate emigrations.

“Properly advised companies will already be aware that moving their residence
abroad is easier said than done, but it is clearly in HMRC’s interest to ensure
that these seeds of doubt are properly sown,” said Caspar Fox, partner at law
firm Eversheds.

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