HC Deb 02 August 1976 vol 916 cc596-7W
Mr. Newens

asked the Chancellor the Exchequer if he will make a statement on the treatment for tax purposes of companies registered in the Isle of Man but involved in business operations in other parts of the United Kingdom in relation to normal levels of tax; and if he will specify any exemptions.

Mr. Robert Sheldon

Registration in the Isle of Man would not affect a company's liability to United Kingdom tax. A company resident—that is, managed and controlled—in the United Kingdom is liable to United Kingdom tax on its profits wherever arising. A non-resident company is liable only on income arising in the United Kingdom, subject to the provisions of any relevant double taxation agreement. A double taxation agreement with the Isle of Man—which is not part of the United Kingdom—provides as is usual in such agreements, that a company resident in the island is to be exempt from United Kingdom tax on its industrial or commercial profits unless they are derived from trading in the United Kingdom through a permanent establishment such as a branch, or in certain circumstances an agency, situated here. Profits attributable to such a perment establishent are taxed at normal rates.

Mr. Newens

asked the Chancellor of the Exchequer if he is satisfied that there is no evasion of exchange control regulations applying to the United Kingdom as a whole by companies registered in the Isle of Man.

Mr. Robert Sheldon

The Exchange Control Act 1947—with certain minor modifications specified by Order in Council—applies to the Isle of Man as if it were part of the United Kingdom. There are no special circumstances which would allow any special degree of exchange control evasion by companies registered there.