The Washington herald., 1922-06-11
ALIENS IN ENGLAND
TEMPORARILY NOT
SUBJECT TO TAXES
Must Pay on Profits From
Business Conducted in
Britain.

A person 10 not chargeable with
income tax as q resident who Is in
the United Kingdom merely for
some temporary purpose. with no
intention of establishing a residence.
says Assistant Commercial Attache
Cobb, London. In q special report
to the Department OF Commerce
on British taxation. II. however.
he should reside in the United King
ON for six months or more. he be-
.omes liable In the same way as a
resident for a whole year. II he
comes to the United Kingdom with
the intention OF permanently resid-
.ng there, he is Immediately liable
10 taxation.
The statute says, "a nonresident
shall be chargeable in respect OF
any profits or gains arising, whether
directly or indirectly, through or
from any branch, factorship. agency
receivership or management. and
shall be so chargeable under sec
ton Al OF the income tax. 1912, as
amended by this section, in the name
of the branch. factor. agent, re-
ceiver or maager"
In application of this section, q
resident is taxable on the profits de-
rived from any kind of property
whatever. whether situate in the
United Kingdom or abroad. and. sec
ondly, from any trade. profession.
employment. or vocation, whether
carried on In the United Kingdom
or abroad: and persons whether they
reside in the United Kingdom or not
no matter whether they are British
subjects or not. are chargeable on
the annual profits from any PROV
erty whether in the United kiig.
dom or from any trade, profession.
employment or vocation exercised
within the United Kingdom. by the
income from property is meant
such things as profits. dividends, and
interest, or rent.
1t will be seen that foreigners.
either residents or nonresidents
who are regarded as resides by
reason of their being in the - led
Kingdom for more than six months,
a distinction is made on property in
the United Kingdom and business
carried on within the United King
dom. which should be clearly dif-
ferentiated from trading with the
United Kingdom.
Points Out Elements.
Here the essential factors to be
considered are. first, whether the con-
tract of sale was made in the United
Kingdom, and. second, whether the
delivery Of the goods took place in
the United Kingdom. In other words.
IL a nonresident employs a regular
within I-nftad Ein16np,
has full powers of selling. making
contracts. receiving payment. etc. on
behalf OF his principal on this trade
arising in the United Kingdom. the
question seems to turn about the
points as to whether the contract was
made or the business is carried on
within the United Kingdom. or
whether the agent is merely a pro-
curer OF business which is referred to
the main office. In the case OF a for
eign corporation which maintains in
the United Kingdom an agent or rep
resentative whose sole duty is to pro-
cure business and then refer this
business to the home office and the
home office closes the contract. II
would appear that this is not busi-
ness within the United Kingdom, and
the tax would not accrue.
On this point there was a recent
decision in the house of lords. in re
Greenwood VS.. F. l.. Smith & Co.
The facts of this case are that a
Danish firm, resident in Copenhagen,
manufa ctured cement making ma
chinery which II exported to foreign
countries. 1t maintained a resident
consulting engineer in an office in
London. This engineer was charged
with the discussion of requirements
with prospective customers. the TAX
ing of samples Of earth, and the for
warding of such samples to Copen-
hagen for testing. He was not
charged with the making OF con-
tracts. which were concluded by ne
gotiations direct with his main office
in Copenhagen. After the contract
had been negotiated this engineer had
the general supervision of the con-
struction of important installations
In the United Kingdom sometimes in
conjunction with an engineer sent out
from Copenhagen. In this case the
Danish firm was listed In the post
ONCE and had its name on the door
OF the off1ce of the agent. It was
held by 9the house of lords that the
firm exercised its trade in Denmark
and not In the United Kingdom. and
that the profits made by this firm
were not taxable under the finance act
of 1915.