Ideal offshore tax structure for UK based Ltd company

[ukworldwide]

I am sure this has been addressed in another thread, however, after several hours of searching I cannot find a solid answer.

I am the Director of a UK based retail company with approximately £2,000,000 turnover and £500,000 profit PA.

Historically, I have paid corporation tax at 19% and then further dividends and income tax on profits withdrawn to personal accounts. I would like to minimise these costs.

I was under the impression I would be able to set up an offshore company in Bermuda, cayman islands, Jersey or the Isle of man, to name a few, and invoice the UK based Ltd company sending the profits offshore. Recording this transaction as an expense for management services or something similar - reducing the profits and corporation tax liability for the UK company.

Does anyone have experience doing this?
Which offshore location is best suited?
Best bank account in that location?

 

[Jerry1911]

approximately £2,000,000 turnover and £500,000 profit PA.

My personal advice would be to contact the Big4.

 

[JohnnyDoe]

My personal advice would be to contact the Big4.

They suck.
I know a very good uk tax advisor who can help you, PM me for details.
Btw, in short, the plan you described won’t work.

 

[Eurocash]

Before considering more aggressive tax planning I’d recommend that you take advice and make sure you have exhausted every legal “on shore” method to reduce tax.

It’s surprising just how much you can do here in the UK without sailing even remotely close to the wind.

The unfortunate reality is that it’s pretty difficult to live in the UK + take large drawings from your company + pay tax as if you were offshore

 

[Barney2201]

They suck.
I know a very good uk tax advisor who can help you, PM me for details.
Btw, in short, the plan you described won’t work.

They suck.
I know a very good uk tax advisor who can help you, PM me for details.
Btw, in short, the plan you described won’t work.

Hi, can you PM me the details of your UK tax advisor? In a similar situation and trying not to go down the Big4 route…. Thanks

 

[punkstar69]

They suck.
I know a very good uk tax advisor who can help you, PM me for details.
Btw, in short, the plan you described won’t work.

Interested aswell - please let me know.

 

[JohnnyDoe]

Interested aswell - please let me know.

PMd you

 

[bluelama]

PMd you

Same for me brother.

I have an LTD, and I do E-Commerce. I was even looking to change & start a new company, an LLC in the US to optimize my taxes. Altho, I have to say im not a resident in the UK like the guy who created the post. PM me as I would be more than interested.

Much appreciated.

 

[JohnnyDoe]

Same for me brother.

I have an LTD, and I do E-Commerce. I was even looking to change & start a new company, an LLC in the US to optimize my taxes. Altho, I have to say im not a resident in the UK like the guy who created the post. PM me as I would be more than interested.

Much appreciated.

PMd you.
The tax advisor will feel much in demand these days

 

[rowena]

500k profit is pretty low to deal with Big4. They are expensive.

 

[jkl197]

I am sure this has been addressed in another thread, however, after several hours of searching I cannot find a solid answer.

I am the Director of a UK based retail company with approximately £2,000,000 turnover and £500,000 profit PA.

Historically, I have paid corporation tax at 19% and then further dividends and income tax on profits withdrawn to personal accounts. I would like to minimise these costs.

I was under the impression I would be able to set up an offshore company in Bermuda, cayman islands, Jersey or the Isle of man, to name a few, and invoice the UK based Ltd company sending the profits offshore. Recording this transaction as an expense for management services or something similar - reducing the profits and corporation tax liability for the UK company.

Does anyone have experience doing this?
Which offshore location is best suited?
Best bank account in that location?

- no need of big4, just a very good accountant
- forget the offshore scheme, you will get in trouble, it does not work
- you have 2 main options:
1. find someone trusted (big challenge) that can run your company day to day, you move abroad, for example to dubai (but there are other options), you only take dividends. Problem: if you have wife and kids then they have to move abroad with you as you have to make sure to "cut all ties". Dont even dare to think about a fake foreign residency, HMRC and Home Office know exactly how many days you spend in the UK.

2. stay in the UK, dont pay yourself a salary, make sure your income is less than £9k per year, incorporate a holding company, transfer the shares of your trading company to the holding, your trading company will pay dividends to the holding company (zero tax), from your holding company you take no more than 50k per year of dividends (3k tax, 47k net in your pockets); if someone of your family is involved (for real) in the business give them a share class B of your holding company and that person can do the same (no more than 9-10k of income per year, 50k in dividends). Additionally ask your GOOD Accountant how to make the most of pension pots, SIPP, EIS and SEIS schemes and all similar things. The rest of the money you keep in the holding company and can invest. Or can simply be your piggy bank from which you can draw 50k per year in dividends. You can always draw more than 50k in dividends but the dividend tax will hit you

 

[ukworldwide]

- no need of big4, just a very good accountant
- forget the offshore scheme, you will get in trouble, it does not work
- you have 2 main options:
1. find someone trusted (big challenge) that can run your company day to day, you move abroad, for example to dubai (but there are other options), you only take dividends. Problem: if you have wife and kids then they have to move abroad with you as you have to make sure to "cut all ties". Dont even dare to think about a fake foreign residency, HMRC and Home Office know exactly how many days you spend in the UK.

2. stay in the UK, dont pay yourself a salary, make sure your income is less than £9k per year, incorporate a holding company, transfer the shares of your trading company to the holding, your trading company will pay dividends to the holding company (zero tax), from your holding company you take no more than 50k per year of dividends (3k tax, 47k net in your pockets); if someone of your family is involved (for real) in the business give them a share class B of your holding company and that person can do the same (no more than 9-10k of income per year, 50k in dividends). Additionally ask your GOOD Accountant how to make the most of pension pots, SIPP, EIS and SEIS schemes and all similar things. The rest of the money you keep in the holding company and can invest. Or can simply be your piggy bank from which you can draw 50k per year in dividends. You can always draw more than 50k in dividends but the dividend tax will hit you

Thanks for the advice. The issue is I would still have to pay 19% corp tax with my trading company before withdrawing dividends with the profits.

I am happy to leave the funds in an offshore company, I.e not withdraw to my personal account. I’m just trying to avoid the 19% corp tax. Looking at well over 100k this year.

 

[Barney2201]

Have you considered a move to somewhere like Guernsey? I own a similar size UK company (real not digital) and moved to Guernsey for the exact same reasons. It's a lot easier than moving to a true 'foreign country'. Wife & family lived there and I just bounced back to UK keeping within the 90 midnight rule. We have since moved to the tiny island of Sark for true zero income tax and now travelling. If you need more info just PM me.

 

[pamparana]

PMd you.
The tax advisor will feel much in demand these days

Can you do the same for me, if possible.

I have a UK limited but nothing close to the turnover of the OP though.

 

[JohnnyDoe]

Can you do the same for me, if possible.

Done

 

[CarteBlanche]

Not viable unlesss you're looking to relocate.

IMO Offshore co will almost certainly be caught by CFC rules or transfer pricing rules (preventing profit shifting) or transfer of assets abroad rules, or UK permanent establishment risk or one of the many other anti avoidance rules created by HRMC in the past few years to royally f*ck all UK citizens and that's assuming you can atleast ensure effective place of management and control in the jurisdiction of question (which beyond transactional corporate finance stuff, or investment management/private wealth structures, is actually rather hard). Have you considered relocating?

 

[cheeseall]

@JohnnyDoe could you also DM me about Uk tax advisor? many thanks in advance!

 

[Johnfodden]

PMd you.
The tax advisor will feel much in demand these days

Me also, wouldn’t mind a chat as I’m in a very similar scenario

They suck.
I know a very good uk tax advisor who can help you, PM me for details.
Btw, in short, the plan you described won’t work.

Why would it not work? I was under the impression REGUS run a very similar scenario when renting out their space? When renting an office in London, Payment is made to Luxembourg? I thought it could be processed in this manner.

For example if you had 5 locations, each paying a global fee for franchise management, brand costs and advertising.

 

[Johnfodden]

- no need of big4, just a very good accountant
- forget the offshore scheme, you will get in trouble, it does not work
- you have 2 main options:
1. find someone trusted (big challenge) that can run your company day to day, you move abroad, for example to dubai (but there are other options), you only take dividends. Problem: if you have wife and kids then they have to move abroad with you as you have to make sure to "cut all ties". Dont even dare to think about a fake foreign residency, HMRC and Home Office know exactly how many days you spend in the UK.

2. stay in the UK, dont pay yourself a salary, make sure your income is less than £9k per year, incorporate a holding company, transfer the shares of your trading company to the holding, your trading company will pay dividends to the holding company (zero tax), from your holding company you take no more than 50k per year of dividends (3k tax, 47k net in your pockets); if someone of your family is involved (for real) in the business give them a share class B of your holding company and that person can do the same (no more than 9-10k of income per year, 50k in dividends). Additionally ask your GOOD Accountant how to make the most of pension pots, SIPP, EIS and SEIS schemes and all similar things. The rest of the money you keep in the holding company and can invest. Or can simply be your piggy bank from which you can draw 50k per year in dividends. You can always draw more than 50k in dividends but the dividend tax will hit you

Where do you advise the holding company to be based?

 

[CyprusLawyer101]

Your type of business may allow some side planning like outsourcing a part of your business to a low tax jurisdiction, other than that the UK has of the most sophisticated CFC rules and you should be careful not to create unwanted risks.
Some more info on your business mqy be useful in recieving better feedback.