Where You Live and Where Your Company Is Run. Why Both Matter

A founder living in Manchester moves overseas while two co-founders stay in England. The three of them own shares in the same limited company. The founder who moved keeps signing off budgets, choosing senior hires and approving customer deals from a new home office. Six months later, someone asks whether the business has moved. The answer depends on which part of the business they mean and which rule they are applying.

There are three sets of facts worth drawing before you book a move. The first is your personal residence. The second is where the company is incorporated and where its highest-level decisions are made. The third is where the business has people and activities on the ground. These can point to different places. Together they give your advisers something concrete to work with when they look at tax, reporting and payroll.

Draw your own residence first

Write down the dates when your home arrangements and work will change. Include where your partner and children expect to live, the trips you will make and how long you will work while physically in each country. If you are moving with another director, make a separate record for each of you. Your roles in the same company can produce different personal facts, particularly if one of you keeps a home or spends more time in the UK.

The UK’s Statutory Residence Test uses a tax-year assessment that looks at time and connections in specified ways. The destination applies its own rules. The income you receive needs a separate analysis once residence is established. For example, the tax treatment of your salary can depend on where you do the work. Directors’ fees and dividends can raise different questions. An adviser should start with the position for each person and payment, even if all the money comes from one company bank account.

Map who can make company decisions

Under UK law, a company incorporated here is generally UK tax resident. A company incorporated elsewhere can also be UK tax resident if its central management and control is exercised here. A relevant tax treaty can affect the position. The same company can meet domestic residence rules in more than one country, so check the other country’s rules and the actual treaty instead of assuming that its certificate of incorporation settles the question in both places.

Central management and control is a question about where the highest-level control of the business actually takes place. It can help to look at a decision that mattered in the past year. Perhaps the company committed to a new product, raised money or hired a managing director. Who had the relevant authority? Who received the papers, weighed the options and made the call? Where were they when they did that? The answer may be different from the person who signed the final document or recorded the decision.

Day-to-day management helps tell the story, especially in a small business where the same people make both operational and strategic calls. It still helps to label the activities. Sending an invoice, setting the company’s annual pricing and approving the acquisition of a competitor are different acts. Map each one against the authority of the person doing it. If directors meet by video from several countries, record where they take part and how decisions are made between meetings.

It can also be useful to separate an owner’s influence from their power to act on behalf of the company. In a founder-led business, an owner may be consulted on major decisions or have rights under a shareholder agreement. Show the adviser the agreement and the governing documents, then explain which rights the owner actually exercises and which decisions the directors make. For example, the right to vote on a change of share capital tells one part of the story. Control over product investment, financing and senior management may tell another.

Map where the company works

A business may have a taxable presence in a country even if it is resident somewhere else. A common question is whether there is a permanent establishment there. HMRC’s guidance for UK cases considers a fixed place through which the business is carried on and certain agent arrangements. The destination’s law and the applicable treaty determine what matters for activities there. Ask about the proposed facts, including repeated use of an office or home workspace, local staff and who negotiates or concludes contracts.

Consider three versions of the Manchester founder’s move. In the first she remains a shareholder and hands day-to-day and strategic management to the UK team under an agreed plan that the team actually follows. In the second she still directs major decisions and sells to clients regularly from her home abroad. In the third the company leases an office near her and hires a local sales lead. The home address is the same in all three. The people, authority and business activity change. Those differences give advisers very different questions to examine.

• People and premises. Note where founders, staff and agents work, how regularly they are there, who controls access to a workspace and whether the business pays for it.
• Contracts and delivery. Record where staff solicit, negotiate, approve and sign work. Identify where they perform the work, what clients buy and which legal entity is named in the contract.
• Separate obligations. Ask about employment registration, payroll, social contributions and VAT or sales tax alongside corporate income tax. Each can use its own criteria.

Ask what you will do if the advisers see the same facts differently. They may need to read the treaty together, verify local reporting requirements or ask for more information about who made a particular decision. Allow for that work in the timetable. Put the likely personal and company filing dates on separate lines and agree who will handle any correspondence. This is especially valuable when the proposed move falls near an accounting year end and the business has little time to collect records.

Give both advisers the same operating picture

1. List the legal entities. Include incorporation country, share ownership, directors, signatories, major contracts and the bank accounts used. Put the current position in one column and the proposed one beside it.
2. Walk through an ordinary month. Explain where a new client comes from, who scopes and prices the work, who approves the terms, who delivers the service and where the money is paid. Add one unusual but significant event, such as raising capital or buying an asset.
3. Ask for a shared conclusion. Give the same brief to advisers in both countries. Ask them to identify where they agree, which points depend on the treaty and which responsibilities belong to the company or the individuals. Ask how the company will record evidence as the plan is carried out.
4. Assign a review trigger. An overseas hire, a new lease, a change in signing authority or a founder taking on more work can change the analysis. Have somebody revisit the advice before making the commitment.

When the plan depends on other directors taking responsibility, check that they have the information, time and genuine authority to do it. A practical handover might include changing the access needed to approve contracts, scheduling decisions before deadlines and explaining the arrangement to senior staff. Describe the future business as it will work on a busy Tuesday, when a client wants an answer and somebody has to make the call. That is the operating picture you need to test before you move.