Let's say I incorporated my tech business in the BVI whilst still being a UK national, would I have to pay tax on the profits of my BVI corp in the UK? and how would reporting it work. Please help.
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Bvi corporation
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Yes. You´re managing the company from the UK, and the company will have to pay taxes in the UK. This means that the setup makes no sense, and it will only cause headaches for you; difficulties getting banking, you won't be able to get any payment processing etc etc etc
Income is considered ‘offshore income’ if it comes from a territory outside the United Kingdom. It includes:
- interest from overseas bank or building society accounts
- dividends and interest from overseas companies
- rent from overseas properties
- wages, benefits or royalties earned outside the UK
If you’re a UK resident, you’re breaking the law if you fail to tell HM Revenue and Customs (HMRC) about your taxable offshore income. HMRC is getting tougher on those who try to evade tax by hiding their assets or income offshore.
HMRC has started receiving more information about international investments and financial structures held offshore by UK tax residents. More than 100 countries and jurisdictions have already committed to exchange this data.
As long as you declare all taxable income and gains on your UK tax return you have nothing to worry about.
Since you are working from the united kingdom, You will still be required to pay corporation taxes on the income earned as long as you're working from the united kingdom, You don't benefit from much by having an off-shore company apart from slight anonymity in the register.
If you register a BVI company you won't have to file any accounts or report your earnings to the BVI as long as your income does not come from within the BVI.
You do however have to report your income from overseas to HMRC but this step is so easy because you just have to let HMRC know the figures, There's not much accounting or anything needed and you avoid loads of red tape such as pension schemes, national insurance, vat payments, fines, penalties and all the nonsense.
There isn't a way to "Evade Taxes" legally as its illegal, However you can avoid some taxes by registering off-shore
I hardly doubt what you are saying is true. Surely the UK have CFC and permanent establishment rules?
You are wrong. The BVI Company have to pay Uk Corporate tax since he is managing the Company from the Uk. And the Link you sent have nothing to do with this.
Yes a UK resident company is subject to UK corporation tax on its worldwide income and gains. By contrast a non-UK resident company is only subject to corporation tax on its UK income.
I did not mention once that he didn't have to?
Using a directly owned offshore company is not a straightforward option to avoid UK taxes. One of the reasons for this is the issue of 'deemed' company residence. A company is regarded as a UK resident if:
- It is a UK incorporated company, or
- Its central management and control is in the UK.
Revenue and Customs would initially be concerned with where the board of directors meet, when they meet, and whether they actually exercise control over the company and make management decisions.
So if a board of directors meet overseas and review management decisions and strategies, this should constitute overseas central management and control.
However, where there is a controlling shareholder in the UK, there is a risk that the directors will not correctly exercise their authority over the company with the result that HMRC may argue that the company is run by the controlling shareholder in the UK. In these circumstances the company would be classed as UK resident and subject to UK corporation tax.
In order to pass the central management and control test the majority of the directors should be non-UK resident, and the non-UK resident directors should actively participate in making board decisions.
This therefore means that key business decisions should be taken at overseas board meetings. A UK resident shareholder may therefore establish a non-resident company but it is essential to ensure that the running of the business is left to the non-resident directors
The High Court in the United Kingdom ruled: "the company resides for purposes of income tax where its real business is carried on where the central control and management actually abides"
Clearly you should ensure that detailed professional advice is taken based on your specific facts. As a general rule you should ensure there is an active board which meets and takes decisions.
Some of the key points to bear in mind include:
- Hold at least six board meetings a year (Although three or four should be acceptable).
- Keep full minutes which show the directors exercising central management and control.
- Hold meetings in a fixed place (at least usually).
- Do not hold any board meetings in the UK. In addition you should ensure there is not a quorum of directors resident in the UK (to avoid accidental UK meetings).
- Do not allow directors to participate in directors' meetings by telephone/video conferencing or by using e-mail from within the UK. In addition, where directors' resolutions are passed in writing, don't sign them in the UK.
- If the board wants things done in the UK it needs to delegate the activities to be performed by people in the UK and then supervise what they do at the regular (overseas) board meetings.
You should note that the UK CFC regime will not apply if you are an individual owning an overseas company.
Before falling within the CFC rules a company would firstly need to meet the definition of a 'controlled foreign company'.
A CFC is defined as:
- A non-UK resident company, and
- A company controlled from the UK, and
- A company subject to overseas tax which is less than 75% of the equivalent UK tax.
You would then calculate the UK tax liability and, if the overseas tax paid is less than three-quarters of the UK tax, the overseas company could fall within the CFC provisions.
The only reason I questioned or even considere
The whole reason this structure even crossed my mind was for the sole reason of keeping off companies house and registers for my own privacy. I am not technically looking to nor wanting to "evade" taxes the primary reason was the slight anonymity aspect, if you could suggest any easier options I'm all ears to be honest.
I could imagine you would have to register as an overseas company in the UK and therefore disclose director and shareholders.
I read your question as "would I have to pay tax on the profits of my BVI corp in the UK? and how would reporting it work" .
If you are looking for anonymity it would work with a BVI company, To be even more private you could appoint a nominee but the risks are higher.
No because you will have to register as an overseas company in the UK, and therefore disclose your identity.
