Update Non resident companies

Last year we brought you our analysis of the changes included in Finance Act 2019 which bring non-resident companies into corporation tax in respect of income from a UK property business from 6 April 2020. HMRC has now issued guidance on how this will work in practice and the next steps for organisations and their advisors.

In guidance issued earlier this month, HMRC revealed those transitioning to corporation tax need to:

  1. Register: Non-resident companies will be automatically registered by HMRC but if they do not receive a company Unique Taxpayer Reference (UTR) by 30 June they should contact HMRC direct.
  2. Use online access: HMRC’s free filing service cannot be used to file the corporation tax return. Instead, companies must register for HMRC Online Services to file their return online and corporation tax software must be used.
  3. Get advisors to re-register: Agents acting on behalf of the company must obtain new authorisation in order to file. Their existing authorisation under income tax will not be valid once the company starts paying corporation tax. To re-register, an application can be completed online or on paper.

There are some exceptions to these rules. Non-resident companies will not be required to register for corporation tax for an accounting period if any liability is offset by tax deducted under the non-resident landlord scheme and the company does not have chargeable gains.

Note also that HMRC guidance presently states that “instalments for very large companies” do not apply in the first period following transition. However, our understanding is that the whole of SI 1998/3175 does not have effect and so large company instalments will not apply either (refer to FA 2019 Sch 5 para 48).

Undoubtedly this information will have passed many companies and their agents by, so we’d like to remind you of the need to both register and get reporting processes in place as well as the need to use HMRC-recognised corporation tax software to complete the return.

Alphatax, our corporation tax compliance engine, can help you make the transition with ease by importing the necessary details from your income tax return. To find out more about how you can use Alphatax to comply, contact us today.


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