BEIS, HMT and HMRC consultation on corporate re-domiciliation – Law Society response

The proposals

The government is seeking views on proposals to introduce of a UK re-domiciliation regime, including:

• the advantages of enabling companies to re-domicile
• the level of demand that exists, among which types of companies and sectors
• the appropriate checks and entry criteria
• the merits of establishing an outward re-domiciliation regime
• any tax implications associated with the introduction of a re-domiciliation regime

The proposals would make it possible for companies to re-domicile, making it easier for them to relocate to the UK.

The consultation was issued by:

• the Department for Business, Energy and Industrial Strategy (BEIS)
• HM Treasury (HMT)
• HM Revenue and Customs (HMRC)

Our view

We've responded:

• jointly with the City of London Law Society to chapters one to four of the consultation
• separately to HMRC on chapter five, the technical chapter on tax issues

Read both responses

We support the introduction of a UK corporate re-domiciliation regime that permits inward and outward re-domiciliation.

In our responses, we comment in detail on:

• anticipated sources of demand for re-domiciliation
• the suggested qualification conditions for re-domiciliation

The conditions must be objective, and businesses must be able to predict outcomes with a high degree of certainty.

The re-domiciliation process should be clear and simple, and the requirements for inward re-domiciliation should be as similar as possible to those required for a new incorporation of a body corporate in the UK.

From a practical perspective, a well-resourced team at Companies House, familiar with the re-domiciliation process, will be critical to the success and smooth operation of the new regime.

In response to the technical chapter on tax issues, we comment on:

• loss importation
• capital gains and intangibles base costs
• the personal taxation of company owners
• stamp taxes on shares
• other relevant issues

We would welcome clarity on how inward and outward re-domiciliation will impact a company’s UK corporate tax residence.

What this means for solicitors

A UK inward and outward re-domiciliation regime would increase the attractiveness of the UK as a jurisdiction in which to:

• incorporate a company
• establish and manage funds
• invest

We see this as part of an overall package that aims to make the UK a more attractive place to do business.

Next steps

The consultation closed on 7 January 2022.

The government will first analyse the feedback from the consultation.

If a UK re-domiciliation regime is introduced, it would need to be enacted by primary legislation.

Read the consultation on the GOV.UK website