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Thanks Keith. That is rather what I thought too!
Thank you for your support. A colleague reminds me of a problem for a Spanish company viz
'The Spain company needs this to stay compliant with their own reporting. They could in the future refuse to do business with the UK company unless they can show the residency is not under Spain tax.' However it does not detract from my original opinion that as far as UK taxation is concerned this procedure is unusual to say the least. However HMRC does provide a way round this and you should look at their information sheet INTM162160 which provides a solution to the problem.
Sorry not to have picked this up earlier.