All change on the tax front (TT Nov02 p24-25)

Most foreign groups that have a significant UK presence tend to set up a UK subsidiary company. While ‘branches’ appear less often than subsidiaries, in some sectors such as banking they are common and can be found in most industries and services, such as retailing.We expect them to arise more frequently in future, however, especially branches of companies that chose to incorporate directly under European Union law to demonstrate their non-national credentials. With branches having been around since the inception of taxation, it is surprising how little statutory guidance there is regarding their taxation. The corporation tax charge on branches comprises just one section of the Taxes Act, taking up less than 20 lines of text.