BEIS, HMT and HMRC Consultation on Business Redomiciliation – Law Society Response

Proposals

The government is seeking views on proposals to introduce a redomiciliation scheme in the UK, including:

  • the benefits of allowing businesses to relocate
  • the level of demand that exists, including the types of businesses and sectors
  • appropriate controls and entry criteria
  • the merits of setting up an outgoing redomiciliation scheme
  • the possible tax implications linked to the implementation of a redomiciliation scheme

The proposals would allow businesses to relocate, making it easier for them to relocate to the UK.

The consultation was issued by:

  • the Department of Business, Energy and Industrial Strategy (BEIS)
  • Her Majesty’s Treasury (HMT)
  • HM Revenue and Customs (HMRC)

Our point of view

We answered :

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

Read both answers

We support the introduction of a UK business redomiciliation scheme which allows inbound and outbound redomiciliation.

In our responses, we comment in detail:

  • anticipated sources of redomiciliation request
  • the proposed qualification conditions for the redomiciliation

The conditions must be objective and the companies must be able to predict the results with a high degree of certainty.

The redomiciliation process should be clear and simple, and the requirements for incoming redomiciliation should be as similar as possible to those required for a new incorporation of a UK legal entity.

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

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

  • loss import
  • capital gains and basic costs of intangible assets
  • the personal taxation of company owners
  • stamp duty on shares
  • other relevant questions

We would like clarification on the impact of incoming and outgoing redomiciliation on a company’s UK tax residency.

What this means for lawyers

A UK inbound and outbound redomiciliation scheme would increase the attractiveness of the UK as a jurisdiction in which:

  • set up 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 January 7, 2022.

The government will first analyze the feedback from the consultation.

If a UK redomiciliation scheme is introduced, it will need to be enacted by primary legislation.

Read the consultation on the GOV.UK website