Sub contractor in UK - is it Perm Establishment

[janesboro]

Appcreciate any help on this

An irish company managed in Ireland --sending employees to uk over period of 18 months including managing director-- guys will be coming home regularly so will spend 50-60 days in uK non consecutively over this 18 month period working for same company but on geographically different sites- does testing work and consultancy work re large scale electrical projects - does not actually install anything - merely testing the electrical aspect of the building.

Does this constitute a Permanent Establishment for Corporation purposes thus making it liable to UK Corporation Tax - i think not as not in UK on any one site for more than 6 months.

Any help or guidance will be appreciated

 

[Breninio]

In order for there to be a PE there must be a fixed place of business from which the business of the enterprise is carried out. The place of business does not need to be owned or rented by your company, if you are on site with a a customer/client it will be a place of business. Therefore, in order to determine whether a PE is created in the UK it is necessary to determine whether the place of business is "fixed". The meaning of fixed is not defined but it is accepted that it relates to a fixed geogrpraphic location and there must be an element of permanency. Therefore if as you say your employees carry out their duties at different geographical locations during the course of the contract, then it will be necessary to look at each location separately to determine whether it constitutes a PE. While not definitive, a place of business in existance for less than 6 months would generally not be considered to have the level of permaneny required for a PE. When you say that the employees will be present for approx 50 - 60 days over the 18 month period, you will need to watch whether, in total, activities are carried out at any one place of business for 6 months or more (e.g. one employee spends 2 months and comes home, another employee spends a further 2 months and so on). Where activities are recurrent as in this case, they are looked at in their totality. Therefore to summarise, if there is no one site where your employees will be present in total for a period of 6 months or more over the 18 month period, I wouldn't think you have a PE issue.