51茶馆

Branch or agency - statutory definition and practical recognition of a branch

Since references to 鈥榖ranch or agency鈥� in the non-resident company CT charging legislation at ICTA88/S11 were changed to 鈥榩ermanent establishment鈥� for accounting periods beginning after 1 January 2003, the term 鈥榖ranch or agency鈥� only remains relevant to non-residents chargeable to income tax. Although ITTOIA05/S6(2) under which non-residents are charged to income tax does not mention 鈥榖ranch or agency鈥�, the machinery provisions for assessment and collection of tax atFA95/S126&Sch23 impose the non-resident鈥檚 liability on the UK branch or agency (see INTM268020.)

There is a statutory definition of 鈥榖ranch or agency鈥� at ICTA88/S834(1) thus -鈥渁ny factorship, agency, receivership, branch or management鈥�. This is not particularly helpful so we must look for authority elsewhere including case law.

Most people recognise a branch of a foreign business when they see one and the impression given to the public is helpful in deciding whether or not a branch exists. For example there are many branches of foreign banks that trade on the High Streets of many towns and cities in the UK. We know this, whether we bank with these branches or not, because the name of the foreign bank will be displayed across the shop front of the UK branch. The personnel running the UK branch will be carrying on the part of the foreign bank鈥檚 trade that takes place in the UK. This amounts to the UK presence of the foreign bank鈥檚 trade, i.e. a branch of its trade. That鈥檚 an easy example in part because banks actually call themselves branches but it is worth stressing that whatever terminology is used it is the activities carried on in the UK in relation to the foreign enterprise鈥檚 overall business activities that are most relevant in deciding whether the UK activities are a branch of the foreign business.