Corporation Tax Act 2010

Circumstances where there is no permanent establishmentU.K.

1142Agent of independent statusU.K.

(1)A company is not regarded as having a permanent establishment in a territory by reason of the fact that it carries on business there through an agent of independent status acting in the ordinary course of the agent's business.

(2)Sections 1145 to 1151 apply for the purpose of supplementing subsection (1) in relation to transactions carried out on behalf of a non-UK resident company by a person in the United Kingdom acting as—

(a)a broker (section 1145),

(b)an investment manager (sections 1146 to 1150), or

(c)a members' or managing agent at Lloyd's (section 1151).

1143Preparatory or auxiliary activitiesU.K.

(1)If the condition in subsection (2) is met, a company is not regarded as having a permanent establishment in a territory by reason of the fact that—

(a)a fixed place of business is maintained there for the purpose of carrying on activities for the company, or

(b)an agent carries on activities there for and on behalf of the company.

(2)The condition is that, in relation to the business of the company as a whole, the activities carried on are only of a preparatory or auxiliary character [F1and are not part of a fragmented business operation].

[F2(2A)Activities are “part of a fragmented business operation” if—

(a)they are carried on (whether at the same place or at different places in the same territory) by the company or a person closely related to the company,

(b)they constitute complementary functions that are part of a cohesive business operation, and

(c)subsection (2B) applies.

(2B)This subsection applies if—

(a)the overall activity resulting from the combination of the functions mentioned in subsection (2A)(b) is not activity that is only of a preparatory or auxiliary character, or

(b)the company or a person closely related to the company has a permanent establishment in the territory by reason of carrying on any of those functions.

(2C)A person who is not a company is to be treated for the purposes of subsection (2B)(b) as having a permanent establishment in a territory if, were the person a company, the person would have a permanent establishment in the territory.

(2D)For the purposes of this section, one person (“A”) is closely related to another person (“B”) if—

(a)A is able to secure that B acts in accordance with A’s wishes (or vice versa),

(b)B can reasonably be expected to act, or typically acts, in accordance with A’s wishes (or vice versa),

(c)a third person is able to secure that A and B act in accordance with the third person’s wishes,

(d)A and B can reasonably be expected to act, or typically act, in accordance with a third person’s wishes, or

(e)the 50% investment condition is met in relation to A and B.

(2E)The 50% investment condition is met in relation to A and B if—

(a)A has a 50% investment in B (or vice versa), or

(b)a third person has a 50% investment in each of A and B,

and section 259ND of TIOPA 2010 (meaning of “50% investment”) applies for the purposes of determining whether a person has a “50% investment".]

(3)[F3In this section] “activities of a preparatory or auxiliary character” include (without prejudice to the generality of that expression)—

(a)the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the company,

(b)the maintenance of a stock of goods or merchandise belonging to the company for the purpose of storage, display or delivery,

(c)the maintenance of a stock of goods or merchandise belonging to the company for the purpose of processing by another person, and

(d)purchasing goods or merchandise, or collecting information, for the company.

1144Alternative finance arrangementsU.K.

(1)Subsection (2) applies if alternative finance return is paid to a non-UK resident company.

(2)The company is not regarded as having a permanent establishment in the United Kingdom merely by virtue of anything done for the purposes of the alternative finance arrangements—

(a)by the other party to the arrangements, or

(b)by any other person acting for the company in relation to the arrangements.

(3)In subsection (1) “alternative finance return” means alternative finance return within the application of—

(a)section 564I, 564K or 564L(2) or (3) of ITA 2007, or

(b)section 511, 512 or 513(2) or (3) of CTA 2009.

(4)In subsection (2) the reference to “the alternative finance arrangements” is a reference to the alternative finance arrangements under which the alternative finance return mentioned in subsection (1) is paid.