29 Oct 2021 9:23 AM

This consultation was announced in the October 2021 Budget and is due to close on 7 January 2022.  It is seeking views on the proposed introduction of a UK re-domiciliation regime, which would make it possible for companies to re-domicile.  This system would enable a foreign-incorporated company to change its place of incorporation to the UK while maintaining its legal identity as a corporate body, giving business continuity, which would make it easier for overseas companies to relocate to the UK, thereby promoting jobs, innovation and investment in the UK.

The consultation is seeking views on the following:

  • The advantages of giving companies the right to re-domicile and the degree to which the current system (involving the creation of a new UK entity) provides barriers to relocation, in terms of administrative, regulatory and tax disadvantages etc.
  • The level of demand for a re-domiciliation regime and which types of companies and sectors would be most interested in this. The Government’s current intention is for the regime to be open to any qualifying company, instead of restricting it to certain sectors or industries, but information on demand levels will assist with the design of the proposed new regime.
  • Are there aspects of other jurisdictions’ re-domiciliation regimes which the UK should seek to replicate or avoid? Are there other barriers that would prevent companies re-domiciling to the UK even if there was a re-domiciliation regime?  Are there other wider issues to consider?
  • What would appropriate checks and entry criteria be? The Government’s current view is that an economic substance test is not necessary but do responders agree?  The consultation document sets out proposed criteria and requests views on these and a number of issues, such as solvency requirements, turnover limits and directors’ conduct etc.
  • The merits of establishing an outward re-domiciliation regime for UK companies wishing to move abroad. This would include economic considerations, the types of conditions to be required, time-limits for re-entry etc.
  • What are the tax implications associated with the introduction of a re-domiciliation regime? Is clarification required regarding residence status, what protections might be needed to prevent loss-importation etc?  Do responders have views on capital gains issues, stamp taxes, VAT, the impact of the new regime on personal taxation and any other tax consequences arising out of the proposed new regime?  Should amendments to UK tax law be considered?


Who is affected?

This consultation applies to UK and overseas companies wishing to relocate and may be of particular interest to multi-national businesses.

We will publish an update on the outcome, however if you have any questions please contact us.