Yesterday, the UK tax authorities published a note finally clarifying the registration requirements imposed on such investors.

In summary:

  1. A non-UK resident corporate investor making a direct or indirect sale of UK commercial property will need to register for UK corporation tax within 3 months of such a sale. This is because from 6 April 2019 (last Saturday), non-UK resident corporate investors are subject to UK corporation tax when they realise a capital gain from direct or indirect sales of UK commercial real estate. These rules are complex, but broadly capture sales of interests in a property rich entity or sales of commercial properties directly. Read our earlier insight to find out more.
  2. If there is no need to register before 6 April 2020, all non-resident corporate investors in UK real estate will, in any event, need to register as a result of coming within the charge to corporation on 6 April 2020. This is the date from when all non-resident corporate investors will be subject to UK corporation tax both on capital gains described above and on income (including rent) from UK real estate. The UK tax authorities have stated that they will be contacting such companies in the summer of 2019 with further detail (we assume including detail on how to register).

We would be happy to provide further advice regarding UK corporation tax more generally, which has more detailed rules than the UK income tax regime which applies to UK rental income until April 2020 (including for example certain rules restricting the deductibility of interest).

It may be worth noting that a single asset SPV company will cease to be subject to UK corporation tax if it has sold its only asset of UK real estate. It would therefore only have a one day accounting period corresponding to the disposal.

In terms of payment dates for the SPV, assuming that gains of over GBP 1.5m would be made (such that the “instalment regime” for paying CT for large companies will apply), tax on the gain will generally be due on the date of the disposal. By concession, the UK tax authorities should allow payment within 3 months and 14 days after the end of the accounting period in which the sale was made (which, as noted above, may be one day only in the case of single asset SPV companies).

The full guidance note can be viewed here: https://www.gov.uk/guidance/register-a-non-resident-company-for-corporation-tax. If you have any questions, please don't hestitate to contact Richard, Victoria or another member of the BCLP Tax Advice & Controversy team.