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Markel Tax

04 May 2020

Online process to certify business residence

In March 2020, HMRC introduced a new version of Form RES1 for companies and partnerships to apply for a certificate of residence. These documents are often requested by a foreign tax authority where a business has foreign-source income from that country. Form RES1 is used where there is a double tax treaty between the countries, and the tax rights belong to the UK, or a lower rate of withholding tax is applied.

There are certain specific forms that should be completed for certain countries. Information regarding such countries can be found in the country-specific pages of the Double Tax Relief Manual.

The new form is completed online, but needs to be printed and posted to HMRC at the address on the form - although companies and partnerships with Customer Compliance Managers or Customer Coordinators should send the forms electronically to these individuals. The certificate should take between 15 to 30 working days to be issued.

The dates for which the certificate can be issued are the date of issue (i.e. certifying that the business is UK resident at that time) or, for a specific period, the start and end date, which must be in the past. HMRC will require the reason why the certificate is required.

The information required, other than the relevant dates and reason, are:

  • Company or partnership UTR,

  • Type of income,

  • The country requiring the certificate (it is possible to apply for income from more than one country on the form).

You should know the article number and whether the income is subject to tax or is liable to tax in that country from the relevant double tax treaty.
Companies need to give the tax office reference number. If the company has not yet completed a tax return, an explanation as to why the company is a UK resident is required.

For partnerships, details of the managing partner are required, including their UTR if they complete a self-assessment tax return. The names and residency status of all partners, wherever resident, need to be included on the form, or on a separate schedule.

More than one copy of the Certificate can be issued at a time. Certificates can also be sent to the registered agent of the business.

The forms are issued with a digital signature. However, some jurisdictions require either a ‘wet’ signature or even an Apostille; a document signed by the Legalisation Office of the Foreign and Commonwealth Office confirming that the person signing the Certificate is who they purport to be. The business must arrange to obtain the Apostille.

Form RE31 can also be used where a letter of confirmation is required instead of a certificate of residence - for example, when required by some countries before a business can trade in that country.

This change to an electronic filing regime—compared to forms, which must be completed by hand—is welcomed, particularly where businesses may be able to gain much needed cash flow advantages from successful applications.
HMRC say that using this form, and with current working practices, it is unlikely that customers will notice a disruption in the service they receive.

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Tagged International Tax
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04 May 2020

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