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Best structure for UK Company? LTD vs LLP?

Decanl

New member
Hi everyone.
I am looking for the best solution to open a company in the UK as a non-resident.

I can't figure which option is better for me, LLP or LTD.

A bit of background; Company is fully legal no shady things going on or anything like that. We want to open a company in the UK as it is a very respectable country, I am UK's non-resident.
The company is doing 99% of business in the USA, all clients are from the USA.

Business is 100% online-based doing Public Relations

So in this case as I understand it's better to open LLP;
If the members of the LLP are non-resident and the income of the LLP is non-UK source, then the LLP and its members will not be subject to UK taxation.
So what is the best way to set up UK Company and cut the tax % to the minimum?

Please, any suggestions and advice is welcome.
 

Sols

Entrepreneur
If you want to avoid UK tax, then LLP is the way to go. An LTD is taxed at 19%, whereas an LLP is not itself taxed.
 

mange38

Entrepreneur
Find a company formation agent which can set up a UK LLP. That by itself shouldn't cost more than 80 EUR, just use Google.

Designated members will be the IBC and you. You'll also have to file a tax return (HS380) and register both yourself and the IBC for self-assessment with HMRC (forms SA401 & SA402).

As long as there's no UK resident members and/or a UK PE (office for example), you don't have to pay any taxes or report any transactions to the UK, which in practice means those tax returns will be empty.
 

GiGoGo

I make things happen
Silver Member
Find a company formation agent which can set up a UK LLP. That by itself shouldn't cost more than 80 EUR, just use Google.

Designated members will be the IBC and you. You'll also have to file a tax return (HS380) and register both yourself and the IBC for self-assessment with HMRC (forms SA401 & SA402).

As long as there's no UK resident members and/or a UK PE (office for example), you don't have to pay any taxes or report any transactions to the UK, which in practice means those tax returns will be empty.
How about Vat?
 

mange38

Entrepreneur
I am not 100% sure and you should check it with a UK accountant who has experience dealing with non-resident LLPs.

However, I think that if you have less than 81,000 GBP UK-sourced income you don't have to register for VAT.
 

Sols

Entrepreneur
VAT is more complicated than that (you have to look at how much you generate in each member state), but it sounds like it won't be an issue in this case since the clients are 99% US. Unless the other 1% are within EU and generate significant revenue, they might be able to get away with no VAT concern at all.
 

mange38

Entrepreneur
VAT is more complicated than that (you have to look at how much you generate in each member state)
Indeed, if you have lots of customers from a single EU country and go over the threshold you will have to register the LLP for VAT in that country, but not in the UK (unless that country is the UK itself). That makes sense.
 

CaLViN

Active Member
Do you plan to open a bank account ? Then dont go for LLP.It will be nearly impossible to open a proper bank account for any LLP company.
 

JohnSeed

Corporate Services
BANNED MEMBER
Do you plan to open a bank account ? Then dont go for LLP.It will be nearly impossible to open a proper bank account for any LLP company.
That's exactly what I have heard too. It is impossible to open a bank account for a LLP which is different from a LTD!
 

Sols

Entrepreneur
First of all, it depends on the partners. Generally speaking, banks assess an LLP based on the worst partner. If one partner is an EU national and EU resident, and the other partner is an IBC, the whole LLP is treated like an IBC.

But if you show up as an LLP where all partners are either natural persons resident in/citizens of reputable countries, I haven't seen any major differences between LLP and LTD. Some banks or EMIs might not be familiar with what an LLP is so you have to explain why there are no traditional shareholders and directors, for example.

There is a distinction worth making here between a UK LLP and a Scottish LP. I have seen a handful of EMIs and banks refuse to work with Scottish LPs but not have the same limitation against UK LLP. For a while, Scottish LPs emerged as very popular with corporate service providers targeting Russia and surrounding countries. I haven't seen as much of it lately, presumably because of stricter KYC and UBO disclosure and because of difficulties obtaining accounts.
 

Decanl

New member
I am not 100% sure and you should check it with a UK accountant who has experience dealing with non-resident LLPs.

However, I think that if you have less than 81,000 GBP UK-sourced income you don't have to register for VAT.
Maybe any suggestions for this? I have been talking with a local accountant and he is giving misleading information...

VAT is more complicated than that (you have to look at how much you generate in each member state), but it sounds like it won't be an issue in this case since the clients are 99% US. Unless the other 1% are within EU and generate significant revenue, they might be able to get away with no VAT concern at all.
There is practically no UK or EU income, if there will be some, it won't be significant.

Do you plan to open a bank account ? Then dont go for LLP.It will be nearly impossible to open a proper bank account for any LLP company.
Yes I will need a bank account and payment processor for site - Stripe, PayPal, Apple Pay and everything else, that's the main reason behind making UK company, because it is respectable and there will be no problems opening payment proessors.

First of all, it depends on the partners. Generally speaking, banks assess an LLP based on the worst partner. If one partner is an EU national and EU resident, and the other partner is an IBC, the whole LLP is treated like an IBC.

But if you show up as an LLP where all partners are either natural persons resident in/citizens of reputable countries, I haven't seen any major differences between LLP and LTD. Some banks or EMIs might not be familiar with what an LLP is so you have to explain why there are no traditional shareholders and directors, for example.

There is a distinction worth making here between a UK LLP and a Scottish LP. I have seen a handful of EMIs and banks refuse to work with Scottish LPs but not have the same limitation against UK LLP. For a while, Scottish LPs emerged as very popular with corporate service providers targeting Russia and surrounding countries. I haven't seen as much of it lately, presumably because of stricter KYC and UBO disclosure and because of difficulties obtaining accounts.
I am EU resident/national and my second partner is also EU resident/national and we are thinking to add as 3rd partner Seychelles IBC as the main profit earner.

So how would this work? I am really looking for the best option to minimize taxes, I am also okay to pay them but at the lowest rate possible..
 

Sols

Entrepreneur
I am EU resident/national and my second partner is also EU resident/national and we are thinking to add as 3rd partner Seychelles IBC as the main profit earner.

So how would this work? I am really looking for the best option to minimize taxes, I am also okay to pay them but at the lowest rate possible..
Why bother with the Seychelles IBC? That IBC is going to turn your LLP from a pretty normal, easily understood entity to one viewed with immediate suspicion.

Unless you live in a very favourable tax situation, the IBC isn't going to make your tax burden any better. It might make it worse. As a partner of an LLP, you would typically only have to pay personal income tax where you live. If you add an IBC into the mix, you have to pay corporate tax on the IBC (whose profits will be considered corporate profits where you live) and then you have to pay tax again on funds you pay yourself from the IBC.

If you drop the IBC, you can form the LLP with just about any decent formation service and then go open an account with an EMI or try a bank. It should also be fairly straight-forward to get a payment processor, although you may need to explain to them why you don't have an office in the UK. Some will say no but just keep going.

If you have an IBC in there, you will limit your banking and payment processing options.
 

mange38

Entrepreneur
It makes sense if his country doesn't impose CFC rules on individuals and if the IBC is owned by himself.

As far as I know, an LLP *has* to distribute profits which means you will be forced to send at least some amount to yourself whereas if one of the members is an IBC you can distribute like 95% to the IBC.
 
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