How to File Corporation Tax Returns for Non-Resident Limited Companies

Aug 20, 2021

New Changes for Non Resident Limited Companies

Non-resident limited companies that own UK rental property are now well into the first year of filing their accounts under the corporation tax system. Previously, foreign limited companies would file an SA700 under the self-assessment system.

The major difference to the old system is that accounts will need to be prepared as well as a corporation tax return (CT600). The return and accounts will then need to be filed electronically using a commercial iXBRL filing software system.

HMRC have advised that initially, all new tax return periods will run to 5th April 2021, keeping in line with the self-assessment tax year. If the company prepares its accounts to a different date the company must notify HMRC in writing of the accounts year-end so they can update the new corporation tax record.

Where letting agents are withholding tax the rules will be changing slightly to accommodate the transition to corporation tax but the fundamentals of the regime will remain in place.

There has been a lot of confusion about what documents are required to be submitted to HMRC along with the CT600. This prompted us to go on a mission to find out what the actual requirements are, firstly because we have a large number of non-resident company clients that own UK property but also because there is so little information on this.

One of the problems which do not appear to have been taken into consideration is that in many circumstances the non-resident limited company generally has other sources of income that are separate to the income from the UK asset. How then do you strip out just the UK rental income and report this?

The Solution

After much research and back and forth with HMRC, we have established that along with the completed CT600, a copy of just the profit and loss for the UK asset can be submitted along with a copy of the full accounts that are submitted in the company’s country of incorporation as PDF’s instead of iXBRL accounts.

If you are struggling to understand what is required then get in touch.

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