It has long frustrated companies looking to move to the UK that there is no simple way to "redomicile" a non-UK company so that it becomes a UK company.
As a workaround, a foreign company can become UK tax resident, by exercising central management and control here, but at present it cannot change its governing law to UK company law, nor can it end the oversight of its old jurisdiction whilst retaining continuity of corporate identity.
This can result in hybrid or dual-resident companies which are subject to tax and legal requirements in two jurisdictions, both the UK and their original jurisdiction of incorporation. In some cases a tax treaty between the UK and the other jurisdiction will eliminate double taxation that might otherwise arise, but from a compliance perspective this is more complicated than it needs to be.
As part of the Budget measures, the government has published a consultation on changing UK law to allow for corporate redomiciliation. This is an existing feature of company law in some of the UK's competitor jurisdictions (Canada, Ireland, Luxembourg, New Zealand, Singapore and the US, amongst others, are mentioned in the consultation).
A redomiciliation is a simpler and more complete means of relocating a company, involving a foreign-incorporated company changing its place of incorporation to the UK (and ceasing to be governed by the laws of its original home state) while maintaining its legal identity as a corporate body.
We have argued that the lack of this feature in UK law represents a competitive disadvantage, and it is encouraging to see the government looking seriously at addressing this shortcoming.
Alongside the new UK tax regime for asset holding companies used by diversely-owned funds or institutional investors, a simplified route for re-domiciling foreign companies would represent a significant improvement in the attractiveness of the UK's legal regime when considering relocating business which is currently based overseas.
Responses to the consultation are invited by 7 January 2022.