Offshore Property Developer Tax

Introduction

If you're a non-UK resident company buying and developing property in the UK with the intention of selling it for profit, you have specific Corporation Tax obligations. You must register with HMRC and pay UK Corporation Tax on your profits, even though your company is based overseas.

What counts as offshore property development

You need to register as an offshore property developer if your non-UK resident company acquires or develops UK land with the aim of making a profit when you sell it. This applies when:

• you carry on a trade of dealing in or developing UK land
• you hold UK land as trading stock (property you intend to sell rather than keep)
• a main purpose of acquiring or developing the UK land was to realise a profit from disposing of it

This is different from buying property to hold as a long-term investment for rental income. The key distinction is whether you're actively trading in property (buying to sell) or investing in property (buying to rent out and hold).

The rules in this area are complex, and your specific circumstances will determine whether you need to register.

When you become liable for UK Corporation Tax

Your company becomes liable to UK Corporation Tax on the date you make a disposal of UK land. A disposal means when you sell the property or land, or otherwise transfer ownership.

This liability exists regardless of where your company is registered or where it conducts most of its business.

Registration deadlines

You must register your offshore company for UK Corporation Tax within 3 months of the date of disposal. Missing this deadline can result in penalties, so it's important to plan ahead and understand your obligations before you sell any UK property.

Information you'll need to register

Before you start the registration process, gather the following information:

Company details:

• your company name and any previous names
• country of incorporation
• foreign registration number (if you have one)
• address of your company's registered office
• address of your principal place of business in the UK (if different from the registered office)
• date of incorporation

Tax and accounting information:

• date your company became liable to Corporation Tax (the disposal date)
• date your company intends to prepare its first accounts
• if your company is part of a group: the parent company name and registered office address

Contact person details:

• your first and last names
• your working relationship to the company or your role
• your telephone number and email address

How to register

The standard registration method is to complete HMRC's online form, print it, and post it to HMRC at the address shown on the form. You cannot complete the entire process online.

If you're unable to use the online form, you can write directly to HMRC instead. Your letter must include all the information listed above.

When writing to HMRC, you must include a dummy Unique Taxpayer Reference (UTR) at the top of your letter. Use the 10-digit number: 2410555555. This temporary reference helps HMRC process your registration.

Send letters to:

Corporation Tax Services

HM Revenue and Customs

BX9 1AX

United Kingdom

After registration

HMRC will process your registration and send your official Corporation Tax UTR by post. This is your company's permanent tax reference number for UK Corporation Tax purposes.

The dummy UTR (2410555555) should only be used to chase the progress of your registration if needed.

Appointing a tax agent

If you appoint a UK tax agent or accountant to handle your tax affairs, you'll need to send HMRC a 64-8 form. This authorises your agent to deal with HMRC on your company's behalf, which can be particularly helpful when your company is based overseas.

What happens next

Once registered, your company will need to:

• file Corporation Tax returns for accounting periods where you have UK property development activity
• pay Corporation Tax on profits from disposing of UK land
• maintain proper accounting records of your UK property development activities

The Corporation Tax your company pays will be calculated on the profits made from developing and disposing of UK property.

Sources

• Register an offshore property developer for Corporation Tax
• Authorising an agent to deal with your tax affairs

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.