The situation detailed below is something which I have spent many hours discussing, considering and trying to resolve.
I would sincerely appreciate any advice offered as to whether my plans are sufficiently informed as to avoid repercussions from any authorities in the future:
Over the past few years I have been working on and off in a ‘consultancy’ role, primarily to a single UK company (developing new online sales markets) although also working for other firms in-line with IR35 regulations. Originally self-employed, I have been operating as a LTD company myself for the past 12 months and although barely present in the UK during this period, I have not registered as non-resident up to know.
I should point out that I have a very, very good relationship with the ownership of the trading company and a very flexible arrangement which has basically led to me retrospectively engineering my status from a tax point in recent years, in accordance with the success of our trading.
As I have been working outside the country successfully for most of the past year, and have spent more time outside the UK than inside over the past 5/6 years, I have decided to therefore become non-resident of the UK and will cease trading from my current UK based consultancy. I have reviewed the current regulations and the new 2013 statutory regulations regarding non-residency and will fall well within their guidelines. I’m well under 30 years old and therefore have no other business ties, no property and no family in the UK. Indeed I am considering to spend but 15 days in the UK for 2013-2014 and therefore leave no room for questioning that I am not UK resident. That said, I will certainly aim to present in the UK for around 40 days per year on average over the coming years, which falls well within the statutory requirements for my given circumstances.
Now. I am also to acquire a substantial shareholding of the UK trading company from in the near future.
My plan therefore is to setup an offshore company in the Isle of Man who I will work for. The IoMco will invoice the UK trading company for my consultancy services which will amount to 50% of annual profits. I have no need to draw down from this for personal funds in the near future.
I will notify the UK that I am taking up residence in a S.E.Asian country and I will not need to pay any income tax on dividends received from the offshore investment providing that they are not brought into said country in the same year they were earned. Indeed, I have no intentions to bring in any remotely significant amount of funds into said country and have a very simply standard of living. The dividends will paid into a personal bank account in the Isle of Man.
Although I realise the requirement to provide details of a new residency in order to demonstrate a clear break from the UK, I don’t intend to spend all of my time in ine country. It will however most likely be the place I spend the most time during a year. I understand that this requirement will also be less relevant with the new statutory residency test than it was before its introduction.
At this stage I am unsure of the best vehicle for purchasing the 50% stake of the UK trading company and quite how this will influence any perception of events in the eyes of the revenue is confusing me. It has been proposed that an Isle of Man trust would provide a certain level of anonymity but I’m not sure how relevant that is and indeed whether it is required at all. Other options would be to purchase the shares from my UK trading company but I feel that this is ‘too close to home’ in terms of maintaining ties to the UK. (I won’t become a director of the UK trading company).
I should point out here that I would certainly not rule out the possibility that I will return to live in the UK within the next 5 years. If it was possible to outline a minimum requirement of non-residency (years) for what I am trying to achieve then that would be useful. I believe at least 3 years would be advisable.
Now potential pitfalls that I can see to this plan is whether the revenue inspect the case to find that the earnings that are going offshore as ‘consultancy’ are in some way ‘UK sourced’. I fear that they might enquire as to where the work was done and whether I paid income tax to that jurisdiction.
Options for obtaining a work permit in said S.E.Asian country are not straight-forward. However I also realise that the UK authorities would need to exhaust considerable effort to follow the case up with said countries’ authorities.
In order to try to nullify any potential pitfalls here I have considered trying to gain a visa and work permit in order to work for my Isle of Man company out of S.E.Asian. The IoMco would then pay me a negligible salary which would be taxable in said country. I would then have an even stronger case for residency there and would be able to show the UK authorities that I had paid tax on my salary in said country (double tax treaty?). The dividends drawn down from the company would also be subject to local tax but as I would not be bringing them into the country, that tax would be null.
Further to this I could indeed sub-contract another portion of ‘work’ to an Irish friend to demonstrate that the work was indeed performed in another country and taxed there.
I don’t have any desires to try anything too clever or shady with this and would just like to have the situation setup and resolved so that I can get on with doing the work that earns the money. The figures involved are relatively substantial which is why I would like to get every aspect checked and confirmed to ensure that there’s no recourse should the revenue decide to investigate. However I do feel that my work, which I do almost entirely offshore, is worth 50% off the trading profits and therefore don’t feel that I’m doing anything untoward in sheltering that from UK tax if I’m not using any of the services for which that tax would provide.
Again, any advice offered in relation to this would be kindly appreciated.
I would sincerely appreciate any advice offered as to whether my plans are sufficiently informed as to avoid repercussions from any authorities in the future:
Over the past few years I have been working on and off in a ‘consultancy’ role, primarily to a single UK company (developing new online sales markets) although also working for other firms in-line with IR35 regulations. Originally self-employed, I have been operating as a LTD company myself for the past 12 months and although barely present in the UK during this period, I have not registered as non-resident up to know.
I should point out that I have a very, very good relationship with the ownership of the trading company and a very flexible arrangement which has basically led to me retrospectively engineering my status from a tax point in recent years, in accordance with the success of our trading.
As I have been working outside the country successfully for most of the past year, and have spent more time outside the UK than inside over the past 5/6 years, I have decided to therefore become non-resident of the UK and will cease trading from my current UK based consultancy. I have reviewed the current regulations and the new 2013 statutory regulations regarding non-residency and will fall well within their guidelines. I’m well under 30 years old and therefore have no other business ties, no property and no family in the UK. Indeed I am considering to spend but 15 days in the UK for 2013-2014 and therefore leave no room for questioning that I am not UK resident. That said, I will certainly aim to present in the UK for around 40 days per year on average over the coming years, which falls well within the statutory requirements for my given circumstances.
Now. I am also to acquire a substantial shareholding of the UK trading company from in the near future.
My plan therefore is to setup an offshore company in the Isle of Man who I will work for. The IoMco will invoice the UK trading company for my consultancy services which will amount to 50% of annual profits. I have no need to draw down from this for personal funds in the near future.
I will notify the UK that I am taking up residence in a S.E.Asian country and I will not need to pay any income tax on dividends received from the offshore investment providing that they are not brought into said country in the same year they were earned. Indeed, I have no intentions to bring in any remotely significant amount of funds into said country and have a very simply standard of living. The dividends will paid into a personal bank account in the Isle of Man.
Although I realise the requirement to provide details of a new residency in order to demonstrate a clear break from the UK, I don’t intend to spend all of my time in ine country. It will however most likely be the place I spend the most time during a year. I understand that this requirement will also be less relevant with the new statutory residency test than it was before its introduction.
At this stage I am unsure of the best vehicle for purchasing the 50% stake of the UK trading company and quite how this will influence any perception of events in the eyes of the revenue is confusing me. It has been proposed that an Isle of Man trust would provide a certain level of anonymity but I’m not sure how relevant that is and indeed whether it is required at all. Other options would be to purchase the shares from my UK trading company but I feel that this is ‘too close to home’ in terms of maintaining ties to the UK. (I won’t become a director of the UK trading company).
I should point out here that I would certainly not rule out the possibility that I will return to live in the UK within the next 5 years. If it was possible to outline a minimum requirement of non-residency (years) for what I am trying to achieve then that would be useful. I believe at least 3 years would be advisable.
Now potential pitfalls that I can see to this plan is whether the revenue inspect the case to find that the earnings that are going offshore as ‘consultancy’ are in some way ‘UK sourced’. I fear that they might enquire as to where the work was done and whether I paid income tax to that jurisdiction.
Options for obtaining a work permit in said S.E.Asian country are not straight-forward. However I also realise that the UK authorities would need to exhaust considerable effort to follow the case up with said countries’ authorities.
In order to try to nullify any potential pitfalls here I have considered trying to gain a visa and work permit in order to work for my Isle of Man company out of S.E.Asian. The IoMco would then pay me a negligible salary which would be taxable in said country. I would then have an even stronger case for residency there and would be able to show the UK authorities that I had paid tax on my salary in said country (double tax treaty?). The dividends drawn down from the company would also be subject to local tax but as I would not be bringing them into the country, that tax would be null.
Further to this I could indeed sub-contract another portion of ‘work’ to an Irish friend to demonstrate that the work was indeed performed in another country and taxed there.
I don’t have any desires to try anything too clever or shady with this and would just like to have the situation setup and resolved so that I can get on with doing the work that earns the money. The figures involved are relatively substantial which is why I would like to get every aspect checked and confirmed to ensure that there’s no recourse should the revenue decide to investigate. However I do feel that my work, which I do almost entirely offshore, is worth 50% off the trading profits and therefore don’t feel that I’m doing anything untoward in sheltering that from UK tax if I’m not using any of the services for which that tax would provide.
Again, any advice offered in relation to this would be kindly appreciated.
