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Between 2019 and 2022, a significant number of UK businesses made a considered decision to establish an Irish presence. The commercial and structural logic was well-founded. Brexit had changed the trading environment, Ireland offered a compelling combination of tax efficiency, EU market access, and regulatory stability, and the case for acting was clear. Those structures are now several years old, and the environment in which they were established has shifted in ways that make a formal review both appropriate and necessary.
The five questions below address the areas where exposure is most likely to have developed without any single event drawing attention to it.
This is the foundational question, and the answer needs to be specific. A named individual, employed by and located in Ireland, with real authority to enter into contracts, make commercial decisions, and manage the entity's affairs. Someone who is actively exercising that authority as a matter of course. If the decisions that bind the Irish entity are being made by UK-based directors and confirmed by an Irish director after the fact, the corporate residence of the entity may rest in the UK regardless of where it was incorporated. The tax consequences of that for the entire structure are far-reaching.
The intercompany arrangements between the UK parent and the Irish subsidiary must be priced at arm's length and documented in a way that reflects the current state of the business. If the business has grown, if the functions performed by the Irish entity have evolved, or if the risks borne by the Irish entity have shifted, the transfer pricing documentation needs to have kept pace with those changes. A methodology developed in 2020 describes a business that may bear little resemblance to the one operating today. HMRC's focus on transfer pricing in cross-border structures has intensified, and the documentation needs to be current and defensible under the scrutiny standards that now apply.
The Excluded Territories Exemption or Low Profits Exemption from the UK CFC rules that most businesses with Irish subsidiaries rely upon does not apply by default. It requires analysis, and that analysis needs to be documented. If the Irish entity has operated on the assumption that the exemption applies, without that assumption having been formally tested and recorded, the position carries more risk than it appears to. The documentation needs to address the significant people functions test specifically, meaning where are the people who perform the activities that generate value in the business, and are those people employed by and located within the Irish entity. If the answer to that question has changed through personnel movements, business restructuring, or evolution of the Irish entity's role, the analysis needs to reflect the position as it stands today.
Under the Diverted Profits Tax regime that applied to accounting periods beginning before 1 January 2026, UK companies within scope were required to notify HMRC within three months of the end of each accounting period in which potentially chargeable arrangements existed. That obligation applied even where the business believed no charge would ultimately arise, and the penalties for failure to notify were separate from any underlying charge. The Finance (No. 2) Act 2025-26 replaces DPT with the Unassessed Transfer Pricing Profits regime for accounting periods beginning on or after 1 January 2026, removing the standalone notification obligation for those periods. Businesses with accounting periods beginning before that date remain subject to the previous requirements. If a structure was in place during the DPT period and the notification obligations were not fully met, that gap needs to be identified and addressed before it surfaces in an enquiry.
Board minutes are documentary evidence of where decisions were made and by whom. An Irish entity whose minutes consistently show meetings taking place in London, decisions being made by UK-based directors, and Irish directors joining remotely, is creating a record that supports the argument that central management and control of the entity rests in the UK. That argument, if accepted, has fundamental consequences for the corporate residence of the entity and the tax position that depends upon it. The board governance record needs to show meetings in Ireland, attended in person by directors who are present in Ireland, making decisions about the entity's affairs. If the record does not currently reflect that, the governance practices need to change in a documented and consistent way going forward.
If the answers to any of these questions reveal gaps, the appropriate response is a structured review of the entire position, covering substance, transfer pricing, CFC, the profit diversion history, corporate residence, and board governance as an integrated whole. The cost of that review is modest relative to what it addresses. The right time to conduct it is before HMRC or Irish Revenue raises a question, before a transaction creates due diligence pressure, and before the gaps have accumulated to a point where addressing them credibly becomes very difficult. A structure established on sound commercial logic and maintained with appropriate rigour can serve a business well for many years. That outcome is within reach for any business that approaches it with the right professional support.