Offshore Company + Uk Non Dom Resident

[happylog]

Hello,

If I'm a Uk non Dom resident, running an online business ( no uk client or business, it's a us based business ) in a Hong Kong offshore company. Will HMRC say that I "control and operate" the Hong Kong company from Uk and make me pay Uk corporate taxes on it?

Or will I just pay Hong Kong corporate taxes? This is considered Active Income.

Thank you.

 

[wellington]

Looks more like a argument with HMRC if you are non-dom, besides if you pay taxes in HK, it will be hard to push the requirement to pay taxes ALSO in the UK.

 

[Martin Everson]

Will HMRC say that I "control and operate" the Hong Kong company from Uk and make me pay Uk corporate taxes on it?

Firstly it will be personal income tax and not corporate tax you will end up paying (see P.S section at end of my post).

The UK rules surrounding CFCs and active trading income are extremely complex. There are CFC thresholds and exemptions and some do not apply to HK companies for example. Then you have to throw in UK tax avoidance legislation just to make matters worse.

You can read more below and work out where your situation falls:

https://www.uniwide.biz/articles/cfc-rules-in-the-uk

P.S Bottom line is the worst case the foreign company will be transparent for income tax purposes. Hence you will be taxed as if you earned the money personally and pay tax at UK personal income tax rates. And this applies whether income of CFC is distributed to you or not.