CTM02130 | Corporation Tax: computation of income: special rules: trades wholly abroad and trades in partnership with foreign element

CTA09/S8, S1259 and S1266

Where a company is chargeable in respect of a trade carried on wholly abroad, the income from the trade is computed for CT purposes applying the usual trading income rules. The charge under CT is on the income arising in the accounting period, whether or not remitted to the UK.

Where a trade is carried on abroad by a partnership of which a company resident in the UK is a member, the provisions of CTA09/S1259 (3) apply and the taxable profits of that company are computed as if the partnership were a company resident in the UK (see CTM36500 onwards).

Where a trade is carried on wholly or partly in the UK by a partnership of which a company not resident in the UK is a member, the provisions of CTA09/S1259 (4) and (5) (calculation of profits and losses), CTA09/S1261 (6) (accounting period of deemed company) and S1266, (treatment of UK-resident partners) apply. The taxable profits of that company are computed as if the partnership were a company not resident in the UK (see CTM36500 onwards).

This means a partner resident abroad will be liable to CT (if a company) or IT (if an individual) on the part of the profits which arises from trading in the UK.

For guidance on non-resident companies trading in the UK see CTM34200 onwards.