INTM261020 - Non-residents trading in the UK: Introduction: Introduction to the module
Introduction to the module
Source rule of UK taxation
This section of the guidance concerns non-residents with a trade, profession or vocation in the UK and details the circumstances in which, and the means by which, the UK taxes the profits arising in the UK to a non-resident. This includes individuals, companies and partnerships (where one or more partner(s) are non-resident and any of the activities of the partnership amount to trading in the UK).
Self assessment and registering with HMRC
Where non-residents are chargeable in the UK, Self Assessment (IT or CT) applies. Specialist Personal Tax (part of BAI) is the responsible HMRC office for non-resident individual.
Non-resident companies with a UK establishment in the UK are required under the Companies Act to register with Companies House. Guidance on this process is available here. Such establishments are fixed place of business permanent establishments for corporate tax purposes and must be registered with HMRC. Companies House now offers a joint registration service whereby registration for tax purposes can be made at the same time. A notification of registration of such a permanent establishment will come from Companies House to the HMRC office covering the registered office address in the UK. That office will usually be the responsible office for the non-resident company.
In some circumstances a non-resident company may not have a UK establishment for Companies House purposes but may be trading in the UK through a dependent agent permanent establishment instead. A non-resident company trading through a dependent agent permanent establishment will need to contact HMRC directly to register for corporation tax.
Further guidance on permanent establishment can be found in HMRC's International Manual starting at INTM260000.
Other relevant guidance
Other related sections of guidance on taxation of non-residents that you may be interested in are:
- Taxation of non-resident landlords on income from UK properties - SALF703
- Taxation of non-residents on income from employment in the UK - EIM35000+
- Taxation of non-residents on investment income arising in the UK - SALF706
- Taxation of non-residents carrying out a trade in dealing or developing UK land - BIM60510
- The differences in treatment between resident and non-resident companies - CTM34230
Non-residents process map
In all cases where you are considering the potential chargeability of a non-resident you should consider the facts of the case in the process illustrated below. The relevant guidance for each stage of consideration is sign-posted accordingly.
Stage 1
Is there a charge under domestic legislation on the activities in question? If there is not, you need consider the case no further. [See INTM262000]. If there is, Stages 2 and 4 should be considered from the outset.
Stage 2
If the non-resident is a resident of a state with which we have a Double Taxation Agreement, does the treaty restrict the domestic charge? [See INTM264000]
Stage 3
How much are the chargeable profits that can be taxed in the UK? [See INTM267000]
Stage 4
Having established that there is a domestic charge and having taken account of the effects of the relevant treaty, how do we assess and collect any tax that is due? [See INTM268000]