Section 1143 — Corporation Tax Act 2010: Preparatory or auxiliary activities

Preparatory or auxiliary activities 1143 1 If the condition in subsection (2) is met, a company is not regarded as having a permanent establishment in a territory by reason of the fact that—

a a fixed place of business is maintained there for the purpose of carrying on activities for the company, or b an agent carries on activities there for and on behalf of the company.

2 The condition is that, in relation to the business of the company as a whole, the activities carried on are only of a preparatory or auxiliary character and are not part of a fragmented business operation . 2A Activities are “part of a fragmented business operation” if—

a they are carried on (whether at the same place or at different places in the same territory) by the company or a person closely related to the company, b they constitute complementary functions that are part of a cohesive business operation, and c subsection (2B) applies. 2B This subsection applies if—

a the overall activity resulting from the combination of the functions mentioned in subsection (2A)(b) is not activity that is only of a preparatory or auxiliary character, or b the company or a person closely related to the company has a permanent establishment in the territory by reason of carrying on any of those functions. 2C A person who is not a company is to be treated for the purposes of subsection (2B)(b) as having a permanent establishment in a territory if, were the person a company, the person would have a permanent establishment in the territory. 2CA For the purposes of this section, one person (“ A ”) is closely related to another person (“ B ”) if, based on all the relevant facts and circumstances, A has control of B or A and B are under the control of the same persons, including if the 50% investment condition is met in relation to A and B. 2E The 50% investment condition is met in relation to A and B if—

a A has a 50% investment in B (or vice versa), or b a third person has a 50% investment in each of A and B, and section 259ND of TIOPA 2010 (meaning of “50% investment”) applies for the purposes of determining whether a person has a “50% investment".

3 In this section “activities of a preparatory or auxiliary character” include (without prejudice to the generality of that expression)—

a the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the company, b the maintenance of a stock of goods or merchandise belonging to the company for the purpose of storage, display or delivery, c the maintenance of a stock of goods or merchandise belonging to the company for the purpose of processing by another person, and d purchasing goods or merchandise, or collecting information, for the company.