Where to start? UK Citizen taking online business offshore...

[King1453]

What is your setup ? @JustAnotherNomad

I would like to reduce my tax for my LTD ?

Unfortunately i cant leave the UK so i am after advice thats above the standard things you would do.

I will still pay personal income tax while I’m a UK resident, but the business being registered and operating in another country has nothing to with with the UK HMRC and will not pay UK corporation tax.

Unless I’m missing something here, but thats generally how it works?

So you did verify that input with your accountant and he confirmed the information was correct? Or did you just believe one of the “consultants”?

I’m perfectly happy with my own setup, thank you, but sometimes I’m really tempted to get the Gold membership, just to see what’s discussed there. ;-)

 

[JustAnotherNomad]

I’m not from the UK, but I have simply left my high tax home country. So that probably wouldn’t help you much.
I’m not saying it’s impossible to save taxes (I’m definitely not an expert on the UK tax code), but it’s definitely not as easy as “Oh, it’s an online business, then I’ll just incorporate it in the Seychelles instead of the UK and legally not pay tax in the UK, even though I run everything from my London flat.”
Unfortunately our dear governments aren’t that stupid and there are lots and lots of rules to make it difficult to save substantial amounts in taxes.
Things like trusts and foundations aside (which I don’t know enough about), you would usually have to show substance in the other country. Meaning that you are only a passive owner and not involved in the daily operations of the business. Which would mean that there is a local director who gets paid a regular salary etc. - and there have to be other reasons than saving taxes for establishing the business.

 

[InnocuousNomad]

So you did verify that input with your accountant and he confirmed the information was correct? Or did you just believe one of the “consultants”?

No, and I'm not able to discuss it. Sorry.

 

[King1453]

I think we are going in circles.

To add value lets expand on @JustAnotherNomad "expensive" method.

If you were a UK Citizen how would you approach your tax affairs ? and to avoid the radars of tax bodies

 

[InnocuousNomad]

I think we are going in circles.

To add value lets expand on @JustAnotherNomad "expensive" method.

If you were a UK Citizen how would you approach your tax affairs ? and to avoid the radars of tax bodies

Dude, the last person you want to be taking tax advice from is someone who isn't even a UK resident.

 

[King1453]

Dude, the last person you want to be taking tax advice from is someone who isn't even a UK resident.

I am interested in his thoughts around this. Its a complex topic and i wouldn't even attempt it without a Pro. My other post got shoot down by 1 person saying its near impossible and would require dark web tactics.

 

[JustAnotherNomad]

The basic rules are pretty much the same for most countries because it’s stuff that comes from the OECD and also in the government’s self-interest. So while I don’t doubt there are still viable solutions in the UK, it’s definitely not as easy as “register a company abroad and only pay tax on any money you pay out from the company.”
Just google “permanent establishment UK” and you will find enough reading material to confirm that any such business, while not illegal to register, would have to pay UK taxes due to its place of effective management. And trying to hide the existence of the company from the tax authorities would be considered tax evasion.
So while I can’t give you any concrete advice for what would work in the UK (sorry), I can at least tell you what won’t work.
Simply read any UK tax treaty, you will always see that the UK can tax the company, regardless of where it is registered. And if there is no tax treaty, the UK rules apply anyway.

Solutions that work around that, i.e. where the effective place of management is abroad, are expensive because you’d need to show an office, a local director etc. to prove that you are not actively involved in the daily operations of the business/manage it from your home country. That’s called economic substance and obviously quite expensive. Traditional tax havens are being bullied to check for that themselves, but that’s a different story.

There may be ways around that by distancing yourself from the business through trusts, foundations or other means (some of which would probably illegal). That may or may not work, you should probably pay for proper legal advice. Or get some advice from one of the “consultants” on this forum first and then double check with a lawyer. Note that many “consultants” are self-taught.

There are of course also more complex schemes, which are usually applied by multi-national corporations, but they are even more complex (=expensive) and thus probably not relevant.

 

[JustAnotherNomad]

This is an old article, but anyway:

The ostensible reason for the use of such companies is that income and gains accruing to the company are not subject to tax in the UK by virtue of being non-resident for tax purposes. Providing those income and gains are not paid out to the UK-resident shareholder, the inference is that the company can be used as a "money box" to generate tax-free income and gains over the course of its life.

Unfortunately for the taxpayer but fortunately for the UK Exchequer, such use of offshore companies by most UK-resident taxpayers will not result in such tax savings, due to long-standing anti-avoidance legislation which effectively "looks through" such arrangements to the ultimate shareholder or beneficiary of the income or gains.

https://www.mondaq.com/uk/capital-g...assets-and-legitimately-reduce-my-uk-tax-bill

 

[King1453]

Unfortunately this is something out of my reach i guess .

Thanks for your generalised information

 

[polonieth]

Would be interesting to see what the OP got out of the mentor group as to his options/possibilities. He should at least post an update.

 

[King1453]

i dont think he will share much.

Only way forward would be with fk id

 

[John Andrews]

I would like to reduce my tax for my LTD ?

Your options:

1. move out
2. claim more business expenses
3. if you have family in a low(er) tax country, move the company abroad but stay in the UK

 

[King1453]

apart from standard expenses

what other expenses can you do ?