Accountants for US and UK: When a US Company Is UK Resident

A Delaware or other US-incorporated corporation becomes UK tax resident when its central management and control is exercised in the UK, typically because the founder and board make strategic decisions from London. No UK registration is needed. The company then owes UK corporation tax on worldwide profits and must notify HMRC and file CT600 returns.

For an American founder who relocates to London and keeps running the US company from here, this is one of the least visible and most expensive compliance gaps we see. Specialist Accountants for US and UK filings will recognise the pattern at once: the corporation keeps filing Form 1120 in the United States, the founder files a UK Self Assessment return, and nobody files anything for the company in the UK, even though HMRC may regard it as a UK taxpayer from the day the board's real decision-making moved across the Atlantic. This guide from Jungle Tax sets out how that happens, what it costs, how the US-UK treaty treats a dual-resident company, and how the resulting returns are prepared and corrected.

Why can a US corporation be UK tax resident without any UK registration?

UK law uses two tests for company residence. A company incorporated in the UK is resident by statute. A company incorporated elsewhere, including a Delaware corporation, a Nevada holding company or a Wyoming entity taxed as a corporation, is resident under the long-established common-law test if its central management and control is in the UK. The two tests sit side by side: failing the incorporation test does nothing to protect a foreign company that passes the control test.

Crucially, nothing in the control test depends on a UK filing, a UK bank account, a UK office lease or a Companies House entry. The question is purely factual: where is the highest level of direction over the company's affairs actually exercised? If the answer is "in the founder's London home or office", the company can be UK resident even though every document it has ever signed describes it as a US corporation.

What the case law actually says

HMRC's International Manual describes the case law rule as directed at the highest level of control of the company's business, as distinct from where its day-to-day operations take place (HMRC INTM120060, the case law rule on central management and control). The leading principles drawn from the cases are:

• Residence follows real business direction. A company resides where its real business is carried on, and that is where central management and control actually abides. Where the company trades, sells or employs staff is relevant evidence but not decisive.
• Substance beats constitution. In the leading subsidiary case, overseas companies whose boards formally met abroad were held UK resident because the real decisions were being taken by the parent's board in the UK. If a board merely rubber-stamps decisions made elsewhere, control sits where the decisions were actually made.
• Control can be divided. Exceptionally, where substantial controlling acts take place in more than one country, a company can be resident in each of them.
• A properly functioning board is usually the focus. Where directors genuinely meet, deliberate and decide, the location of those meetings is normally where control sits. More recent tribunal decisions have repeatedly tested whether directors applied their own minds or simply implemented instructions.

HMRC's older published practice (Statement of Practice 1/90, reproduced in the International Manual) confirms that HMRC first asks whether the directors in fact exercise central management and control, and if so, where they do so; and if not, who does and where.

The typical founder fact pattern

Most of the cases we prepare returns for look similar. The founder is the sole or controlling director, often the majority shareholder, and there may be one or two passive US-based co-directors or investor nominees. After the move, the founder approves budgets, signs term sheets, hires senior staff, sets strategy and approves financial statements from London. Board meetings, where they happen at all, are video calls dialled in from the founder's UK home. Written consents are signed electronically in London. On those facts, central management and control has almost certainly moved to the UK, even if the operating business, customers and employees remain in the United States.

What does UK tax residence mean for the corporation?

Once resident, the corporation is within the charge to UK corporation tax on its worldwide profits, not just any UK-source income. The practical obligations follow automatically.

Notification of chargeability within three months

A company coming within the charge to corporation tax must notify HMRC within three months of the start of its first accounting period. Separately, a company that is chargeable for an accounting period and has not received a notice to file must tell HMRC within twelve months of the end of that period. Because a US corporation that has become UK resident has no Companies House number, it will not appear on HMRC's systems in the normal way, and registration generally has to be handled directly with HMRC rather than through the routine online service for UK companies.

CT600 returns and payment dates

• Accounting periods. UK residence starts a new accounting period for corporation tax. An accounting period cannot exceed twelve months, so a US fiscal year that straddles the date control moved may need to be split for UK purposes.
• Filing. A CT600 with computations and accounts is due twelve months after the end of each accounting period. Accounts prepared under US GAAP can generally be used, with UK tax adjustments made in the computations.
• Payment. For companies below the large-company threshold, tax is due nine months and one day after the end of the accounting period.
• Rates. The main rate is 25% for profits above £250,000, with a 19% small profits rate at or below £50,000 and marginal relief between. These limits are divided among associated companies, which for a founder with several entities can pull the company into the main rate quickly.

Quarterly instalment payments

Large companies, broadly those with taxable profits above £1.5 million (divided by the number of associated companies), must pay corporation tax in quarterly instalments starting during the accounting period itself, and very large companies with profits above £20 million pay earlier still. A company that should have been paying instalments for several years carries a late-payment interest charge on each missed instalment, which is often a larger number than the late-filing penalties.

Penalties for failure to notify and late filing

Failure to notify is penalised as a percentage of the "potential lost revenue", meaning the tax that would have gone unpaid. The percentage depends on behaviour (non-deliberate, deliberate, or deliberate and concealed) and on whether disclosure was prompted or unprompted. For a genuine, non-deliberate failure disclosed before HMRC opens an enquiry, the penalty can be substantially reduced and, where the disclosure is made within twelve months of the tax becoming unpaid, potentially reduced to nil. That is the single strongest argument for acting before HMRC does.

Late filing carries fixed penalties that doubled for returns due on or after 1 April 2026: £200 for a return filed one day late and a further £200 at three months, rising to £1,000 and £2,000 where a return is late for the third time in succession. Where a return is more than eighteen months late, a tax-geared penalty of 10% of the unpaid tax applies, rising to 20% after twenty-four months. Late-payment interest runs on top of all of this.

Other UK consequences worth knowing

• Payroll. Pay to the founder for UK duties generally falls within UK PAYE, whatever the company's residence. A US payroll alone does not satisfy UK obligations.
• Companies House. Tax residence does not of itself require UK company registration, but a company with a UK establishment may need to register as an overseas entity carrying on business in the UK. This is a separate question from tax residence.
• Time limits. HMRC can generally assess up to four years back, extended to six years for careless behaviour and twenty for deliberate behaviour, so older years are not automatically closed.

How does the US-UK tax treaty deal with a dual-resident company?

The corporation does not stop being a US resident. Under US law a corporation organised in a US state is a domestic corporation, full stop. It is therefore resident in both countries under their domestic rules, and the treaty's residence article is engaged.

Unlike most modern treaties, the US-UK convention contains no objective tie-breaker for companies such as place of effective management. Article 4(5) provides that where a person other than an individual is resident in both states, the competent authorities shall endeavour to determine the mode of application of the Convention to that person. If they do not reach agreement, the company is not entitled to claim any treaty benefit, except relief from double taxation under paragraph 4 of Article 24, non-discrimination under Article 25 and the mutual agreement procedure under Article 26.

HMRC's guidance confirms that for treaties of this kind dual residence can only be answered after discussions between the two competent authorities, that relevant factors include incorporation, where central management and control and effective management sit, where the business and employees are, and economic links, and that the company cannot take part in those discussions but may make representations (HMRC INTM120085, standard treaty tie-breakers).

Three practical consequences follow:

• There is no automatic answer. A founder cannot simply assert that the treaty makes the company US resident only. Until a competent authority determination is made, the UK filing obligations stand.
• A determination can change the UK position. If the competent authorities agree that the company is to be treated as resident only in the US for treaty purposes, UK domestic law treats a company regarded as resident elsewhere under a double taxation arrangement as not UK resident. That outcome is not guaranteed, and it is not retrospective by default.
• Without agreement, treaty benefits largely fall away. The company remains entitled to double tax relief under Article 24(4), under which the UK credits US tax on US-source profits, but loses benefits such as reduced withholding rates on payments it receives.

Form 8833 treaty disclosure

On the US side, a taxpayer that takes a position that a treaty overrides or modifies a provision of the Internal Revenue Code generally must disclose that position on Form 8833 attached to its return. Where a dual-resident corporation relies on the treaty in computing its US liability, or where the founder relies on treaty provisions on the personal return, the disclosure question should be considered expressly for each year rather than assumed away. Failing to file a required Form 8833 carries its own penalty.

What changes on the US side for the corporation?

Very little changes in form, and that is precisely why the problem goes unnoticed.

• Form 1120 continues. The company remains a domestic corporation taxed on worldwide income at the 21% federal rate and continues to file Form 1120. It does not become a foreign corporation for any US purpose, and it is not a controlled foreign corporation, so Form 5471 is not triggered by UK residence alone.
• UK corporation tax as a foreign tax. UK corporation tax is a creditable foreign income tax, claimed on Form 1118. The credit is limited to the US tax on foreign-source income. Where the profits are US-source, as they often are for a US operating business, the US may give little or no credit, and relief then depends on the UK crediting US tax under the treaty. The ordering must be worked through year by year.
• Dual consolidated loss rules. A domestic corporation subject to a foreign country's income tax on a residence basis is a dual resident corporation for US purposes. Its net operating losses can be restricted from offsetting the income of other US group members unless specific elections and certifications are filed. For loss-making start-ups inside a US consolidated group, this is a frequently missed consequence.
• Foreign account reporting. If the corporation has opened UK bank or brokerage accounts, it is a US person for FBAR purposes and must file FinCEN Form 114 once aggregate balances exceed $10,000 at any time in the year. The founder may also have a filing obligation through signature authority. Our FBAR penalty calculator illustrates the exposure where these were missed.

US and UK treatment compared

Issue	United States (IRS)	United Kingdom (HMRC)
Residence test	Place of incorporation: a Delaware corporation is always domestic	Incorporation, or central management and control in the UK
Scope of tax	Worldwide income	Worldwide profits once UK resident
Headline rate	21% federal, plus any state tax	25% main rate; 19% small profits rate; marginal relief between
Annual return	Form 1120	CT600 with computations and accounts
Relief for the other country's tax	Foreign tax credit on Form 1118, limited to foreign-source income	Credit for US tax on US-source profits under treaty Article 24(4) and domestic relief
Registration trigger	Already registered with an EIN	Notify within three months of coming within the charge
Treaty disclosure	Form 8833 where a treaty-based position is taken	Representations to HMRC in any competent authority process
Dividends to the founder	Dividends from a domestic corporation, generally qualified if holding-period rules are met	Taxable at dividend rates; source likely to be argued as UK

What does this mean for the founder personally?

UK return

A UK-resident founder reports dividends from the corporation on the UK Self Assessment return. For 2026/27, dividends above the £500 allowance are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band.

For founders who arrived recently, there is an important and often overlooked interaction with the four-year foreign income and gains regime available to new UK residents from 6 April 2025. That relief applies to foreign income. A dividend paid by a company that is itself UK resident and centrally managed from London is at real risk of being treated as UK-source income, and therefore outside the relief, even though it is paid by a Delaware corporation. Founders who have been claiming the regime on the assumption that a US company pays US-source dividends should have that position reviewed.

US return

Because the corporation remains a domestic corporation, its dividends continue to be US-source and generally continue to qualify for preferential qualified dividend rates, subject to the usual holding-period rules. There is no change in qualified status merely because HMRC also treats the company as resident. The complication lies in credit ordering: the treaty contains special relief rules for US citizens resident in the UK that determine how much US tax the UK must credit and when the US in turn credits UK tax on the balance. Net investment income tax adds a further layer, since the IRS position is that foreign taxes generally cannot offset it. These interactions need to be computed on both returns together, not in isolation.

Director's fees and salary

Remuneration for work physically performed in the UK is UK-source employment income for a UK resident, and it should appear on both returns with credit claimed on the US side, usually on Form 1116. If it has been reported only in the United States, the UK return needs correcting.

How is the catch-up prepared?

Correcting this position is a return-preparation exercise with a strong evidential core. The steps below reflect how we sequence the work. For wider context on the US side, see our US tax services; for the joint process, our US-UK tax accountants page.

1. Establish when UK residence began

The start date drives everything: the first accounting period, the notification deadline and the penalty computations. It is established from primary evidence, typically:

• board minutes and written consents, including where each director was physically located when they were signed;
• the founder's UK arrival date and subsequent travel records, passport stamps and calendar history;
• where strategic decisions such as financing rounds, acquisitions, senior hires and budget approvals were discussed and approved, evidenced by emails and signing platforms' audit trails;
• the role actually played by any US-based directors, and whether they made or merely ratified decisions.

In some cases the evidence supports a later start date than first assumed, for example where a functioning US board continued to meet and decide for a period after the founder moved. In others it supports divided control. The analysis should be documented in a residence memorandum that sits behind the returns.

2. Prepare the late CT600s

Each UK accounting period is computed from the US accounts with UK adjustments: capital allowances in place of US depreciation, UK rules on interest and intangibles, and a claim for double tax relief for US federal tax on US-source profits. Instalment exposure and interest are calculated for each period. Where losses arise, they are quantified so they can be carried forward in the UK.

3. Make the disclosure to HMRC

Notification, registration and the late returns are presented together with an explanation of the facts and the behaviour behind the failure. The quality of that disclosure has a direct bearing on the penalty percentage, so the narrative, the residence evidence and the computations should be consistent with one another.

4. Revisit the US corporate returns

Form 1120 filings are reviewed for foreign tax credits not claimed on Form 1118, for dual consolidated loss issues, for missed FBAR filings on UK accounts and for any Form 8833 disclosures that should have accompanied treaty-based positions. Amended returns are prepared where the corrections are material.

5. Correct the founder's personal returns

The founder's UK returns are amended or late returns filed to reflect dividends and UK-duty remuneration properly, including any withdrawn claim to the foreign income and gains regime. The US returns are then amended so that foreign tax credits reflect the UK tax actually paid. If personal US filings were also missed during the London years, the IRS streamlined filing procedures may be the appropriate route for the individual.

6. Consider a competent authority request

Where the business genuinely belongs in the United States, a request under the treaty's mutual agreement procedure can be considered alongside the UK catch-up. It is not a substitute for filing: the returns for past periods still need to be brought up to date while the request is pending.

How do you evidence where control sits going forward?

Once the past is corrected, the aim is accurate records that make each future return straightforward to prepare and defend. This is compliance documentation, not restructuring. Useful records include:

• minutes that record where each director was located, what papers they considered and what was decided;
• a board calendar and attendance log that reconciles to directors' travel records;
• clear delegation records showing which decisions are reserved to the board and which are day-to-day management;
• signing records that capture location metadata for written consents;
• an annual residence review, completed before each CT600 and Form 1120 is finalised, confirming whether the company remains UK resident, US resident only, or dual resident.

Founders whose position involves several entities or significant liquidity events will find more context in our high-net-worth and cross-border tax pages.

Key takeaways

• A US corporation run from London can be UK tax resident with no UK registration, office or bank account.
• UK residence brings corporation tax on worldwide profits, a three-month notification duty, annual CT600s and possible quarterly instalments.
• The US-UK treaty has no automatic company tie-breaker; dual residence is resolved only by competent authority agreement, and without it most treaty benefits are lost.
• The company remains a domestic corporation in the US, keeps filing Form 1120, and claims UK tax on Form 1118 within the foreign tax credit limits.
• Unprompted disclosure, supported by board minutes and travel records, is the most reliable way to keep penalties to a minimum.

If your US company has been run from London and has never filed in the UK, the sooner the position is quantified, the more options remain available. Our team prepares the late CT600s, the US corporate corrections and the founder's personal returns as a single, coordinated project, so every figure agrees on both sides of the Atlantic. To arrange a confidential consultation, contact our cross-border team.