On 20 March 2017, a consultation document was published on the Government’s plans to extend the scope of UK corporation tax to non-resident companies in receipt of certain income and gains. The focus of the consultation are such companies who are currently subject to income tax and/or non-resident capital gains tax. This would impact upon non-residents who do not operate in the UK through permanent establishments located here. The deadline for consultation responses is 9 June 2017, but it is not clear when any changes would take effect.

As proposed the new corporation tax charge would extend to:

• income from UK real property, and

• gains on sale of UK residential property by closely-held companies.

Note that gains from commercial property sales are not (yet) affected.

The consultation was first announced as part of last year’s Autumn Statement and the policy behind the planned extension of the scope of UK corporation tax is to ensure that such nonresident companies become subject to the important corporation tax changes taking effect from April 2017, for example:

• the corporate interest deduction restrictions, and

• the reform of the corporation tax loss regime.

The consultation document can be viewed here.