U.K. tax residence.

• Author: Dicker, Adrian J.W.
• Position: Brief Article

In the U.K., as in many other countries, the location of a company's mind and management can determine its tax residence. This is often overlooked by U.S. tax practitioners accustomed to tax based on incorporation and source under U.S. rules. The U.K. had particularly difficult rules based on case law. However, a recent U.K. case, Unigate Overseas Ltd. v. McGregor (Inspector of Taxes), Special Commissioner's Decision, 1996 STC (SCD) 58, significantly restricts the U.K.'s Inland Revenue's ability to argue that a foreign company is resident in the U.K. based on having its central management and control there.

Unigate Overseas Ltd. v. McGregor involved a foreign subsidiary of a U.K. company. The Inland Revenue contended that the policy decisions of the offshore company were made in London by the parent and merely rubber-stamped by the offshore company's...