Running a UK-registered company while living abroad has become increasingly common in our globalized economy. Whether you’ve relocated for lifestyle reasons, business expansion, or tax optimization, understanding the VAT and Corporation Tax implications is crucial for compliance and financial planning.

At FSL Accountancy Ltd, we regularly help business owners navigate these complex cross-border tax scenarios. Here’s everything you need to know about maintaining a UK company while residing overseas.

Understanding UK Tax Residence for Companies

The Central Management and Control Test

The key principle determining UK corporate tax residence is where your company’s “central management and control” actually takes place. This isn’t about where your company is incorporated, but rather where the highest-level business decisions are made.

Key factors HMRC considers:

• Where board meetings are held
• Location of directors when making strategic decisions
• Where day-to-day management occurs
• Location of senior decision-makers

If you’re running your UK company from abroad and making all major business decisions overseas, your company may be considered non-UK resident for tax purposes under the central management and control test.

Double Taxation Treaties

The UK has extensive double taxation treaties with most countries. These treaties often include “tie-breaker” provisions that determine which country has primary taxing rights when a company could be considered resident in multiple jurisdictions.

Corporation Tax Implications

UK-Incorporated Companies

General Rule:

UK-incorporated companies are typically liable for UK Corporation Tax on worldwide profits, regardless of where directors live.

Current rates (2025):

• 19% on profits up to £50,000 (small profits rate)
• 25% on profits over £250,000 (main rate)
• Marginal relief applies between £50,000-£250,000

Customer Location Impact

UK-Based Customers:

Your Corporation Tax liability doesn’t depend on where your customers are located. If your UK company generates profits from UK or overseas customers, those profits are generally subject to UK Corporation Tax.

Overseas Customers Only:

Even if all your customers are outside the UK, a UK-incorporated company typically remains liable for UK Corporation Tax unless:

• The company becomes non-UK resident under the central management and control test
• Double taxation treaty provisions provide relief
• The company relocates its tax residence to another jurisdiction

Non-Resident Company Scenarios

If your UK company becomes non-UK resident, it may still be liable for UK Corporation Tax on:

• UK-source income
• Profits from UK permanent establishments
• UK property rental income
• Gains from disposing of UK property or land

VAT Implications

Standard UK VAT Registration

If your UK company makes taxable supplies in the UK exceeding the £90,000 annual threshold, it must register for UK VAT regardless of where directors live.

Key considerations:

• VAT applies to UK supplies, not based on director residence
• Standard rate: 20%
• Must charge VAT on UK sales to UK customers
• Can reclaim VAT on business purchases

Non-Established Taxable Person (NETP)

If you wind up your UK company and establish a foreign company, you may need to register as a NETP for UK VAT if you:

• Make taxable supplies to UK customers
• Have no UK establishment
• Operate from outside the UK

NETP requirements:

• No minimum registration threshold
• Must register before making first UK supply
• Can appoint UK VAT representative
• Different compliance obligations

Practical Scenarios and Solutions

Scenario 1: Amazon FBA Business

You run an Amazon FBA business through a UK company but live in Dubai. Your inventory is stored in UK warehouses, but you manage everything remotely.

Implications:

• UK company likely remains UK tax resident (Corporation Tax applies)
• Must register for UK VAT if turnover exceeds threshold
• Consider restructuring with UAE company and NETP registration

Scenario 2: Consulting Services

You provide consulting services through a UK company to both UK and international clients while living in Spain.

Implications:

• May claim Spanish tax residence under UK-Spain treaty
• UK Corporation Tax may not apply if Spanish resident
• VAT obligations depend on where services are supplied

Scenario 3: E-commerce Business

Your UK company sells products online to customers worldwide, but you manage operations from Portugal.

Implications:

• Central management and control may be in Portugal
• UK-Portugal treaty tie-breaker provisions apply
• VAT registration needed if UK sales exceed threshold

Key Compliance Considerations

Record Keeping

Maintain detailed records of:

• Where board meetings are held
• Location when making key decisions
• Evidence of overseas tax residence
• Substance of overseas operations

Professional Advice Essential

Cross-border tax scenarios involve complex legislation and treaty interpretation. Professional advice is crucial for:

• Determining tax residence status
• Optimizing treaty benefits
• Ensuring compliance in multiple jurisdictions
• Restructuring planning

Common Pitfalls to Avoid

1. Assuming incorporation determines tax residence
2. Ignoring substance requirements in new country
3. Poor documentation of decision-making locations
4. Failing to consider all tax obligations
5. Not seeking specialist international tax advice

Planning Opportunities

Legitimate Tax Planning

Working with experienced international tax advisors, you may be able to:

• Optimize your corporate structure
• Take advantage of double taxation treaties
• Minimize overall tax burden legally
• Improve operational efficiency

Restructuring Options

Depending on your circumstances, consider:

• Relocating company tax residence
• Establishing overseas holding structures
• Using Non-Established Taxable Person status
• Creating operational subsidiaries abroad

When to Seek Professional Help

The intersection of UK tax law, international treaties, and foreign tax systems creates a complex web of obligations and opportunities. You should seek professional advice if:

• Your UK company generates significant profits
• You’re considering relocating abroad
• You have customers in multiple countries
• You need to restructure for tax efficiency
• You’re facing HMRC enquiries or compliance issues

Why Choose FSL Accountancy?

At FSL Accountancy, we specialize in helping UK companies with international operations navigate complex cross-border tax scenarios. Our expertise includes:

✓ International Tax Planning

• Cross-border structure optimization
• Double taxation treaty advice
• Multi-jurisdictional compliance

✓ VAT Expertise

• UK VAT registration and compliance
• NETP registrations and management
• International VAT planning

✓ Corporation Tax Advisory

• Residence determination
• Treaty optimization
• Restructuring advice

✓ Ongoing Support

• Regular compliance reviews
• HMRC representation
• Strategic tax planning

Take Action Today

Don’t let complex international tax rules catch you off guard. The penalties for non-compliance can be severe, but with proper planning, you can operate efficiently while minimizing your tax burden.

Get Expert Help Now:

📞 Call FSL Accountancy: 020 3322 2007 📧 Email: info@fslaccountancy.co.uk 🌐 Visit: www.fslaccountancy.co.uk

Schedule your free 30-minute consultation to discuss your specific situation and discover how we can help you navigate UK tax obligations while living abroad.

Our experienced team has helped hundreds of UK companies with overseas directors achieve tax compliance and optimization. Don’t go it alone – let FSL Accountancy guide you through the complexities of international business taxation.