Tax

On 27 October 2021, the U.K. government launched a public consultation on the introduction of a U.K. corporate re-domiciliation regime, which would enable a company to change its place of incorporation to or from the U.K. whilst maintaining its legal identity as a corporate body. A new regime could provide a more flexible legal framework in the U.K. and bring it in line with other countries, e.g. Canada, Singapore, New Zealand and a number of U.S. states. The consultation closed on 7 January 2022 and a summary of responses was published on 12 April 2022.¹

Overall, the respondents were supportive of the government’s proposals and highlighted flexibility, predictability and certainty as desirable characteristics of any new regime. The majority of respondents supported a two-way regime, permitting both inward and outward re-domiciliation. More generally, respondents sought clarity around the process and how the regime would work in practice. Many noted that the mere creation of a regime would not attract international investment; the wider business environment would drive that.

Under current U.K. domestic law companies are tax resident in the U.K. if they are incorporated in the U.K. or are centrally managed and controlled in the U.K. (this is subject to double taxation treaties). Many respondents noted that clarification would be welcome as to whether a company will become or cease to be U.K. resident for tax purposes following re-domiciliation to or from the U.K. The majority indicated that it would be preferable to treat a company which re-domiciles to the U.K. as U.K. tax resident by virtue of the re-domiciliation, rather than solely on the basis of its central management and control being in the U.K. – to give parity to companies originally incorporated in the U.K. The rules should also apply equally to outward re-domiciliations.

The government noted that it intends to introduce such a corporate re-domiciliation regime to allow companies to move to the U.K. and that the regime would require new legislation to be enacted. The paper does not explicitly state whether the government intends to legislate for outward re-domiciliation. This consultation represented the early stages of the policy development process and the government will continue to refine its policy, taking into account responses to this consultation and engaging the public as appropriate (including through further consultations).