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Readers' forum : Far from clear?

25 July 2017
Issue: 4609 / Categories: Forum & Feedback

The tax liability of a non-UK company investing in a UK partnership.

FarCo is a limited company incorporated in Farland a non-EU country and has a UK-resident director. The company was established for a specific purpose – to allow its shareholders who are resident in Farland to invest collectively in a property development venture. This will be undertaken by a UK LLP that buys develops and sells UK property.

FarCo has a 50% share in the development income and has no other income or activities in the UK or elsewhere.

Responding to my query of whether the company is subject to income tax or corporation tax on its share of UK trading income HMRC advised that ‘by definition’ because the company has no activity other than being a member of a UK partnership its profits are subject to income tax.

After further research it appears that this may depend on the existence...

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