UK Based Freelancer

[Chris78]

Hello,

I currently run a UK limited company that earns most of it's revenue in USD (around 90%). Nearly all my customers are abroad and some of my competitors seem to be using offshore companies. Therefore, I was looking for advice as to what country offers the best company setup and bank account for my needs. Ideally, I'd like the safest option, nothing "dodgy" which HMRC can possibly have an issue with.

Thanks for the advice!

 

[JohnLocke]

Most people think that they are still able to avoid to pay tax, that's not the case any longer, at least not without a really good setup. What annual profits are you doing?

 

[Chris78]

Thanks for the quick reply.

Around £40-50k profit, but I have a big deal potentially in the offing, so I was just seeing if this was a realistic thing to look into further.

 

[JohnLocke]

You may want to look into something legit to start with and later on move to an offshore jurisdiction with the help of some legal advisor. Are you a UK citizens? are you willing to move to another country?

 

[Chris78]

I'm based in the UK and not willing to move. But yes, if you can recommend maybe a "stop gap" for now, I'd certainly be interested.

 

[Juoffshore]

Hello @Chris78 have you got a UK passport ? if not have you heard about the RND statut in the UK ?

 

[Chris78]

Yes I have a UK passport and I've lived here all my life.

 

[Juoffshore]

Ok so forget about the RND statut.... If you setup an offshore company and you control your company from the UK, your company will be taxable as a UK company.
Then as a UK citizen you will bave to pay tax on your worldwilde incomes !
If you want to set up an offshore company, as said the "admin" you should move out from the UK.

 

[Chris78]

Thanks for that. But if I have an offshore company that avoids UK corporation tax, and pay myself in dividends from that offshore company, would I not only be taxed the 7.5% on any dividends I receive? This is still a big saving as technically I'm paying 26.5% tax at the moment (19% corporation tax and 7.5% on dividends). Maybe this is not possible, but you might see where I am coming from!

 

[Juoffshore]

I understand, but who is gonna manage the offshore company ? Is it you ?

The big issue is "central management and control of your offshore company". In case of control from HMRC, you have to able to show them that the management and control of your offshore company is overseas. You need to hire one director and have real activities from there.
it's essentially a question of fact so in case of investigation HMRevenueCustoms will look at where in actual fact the company is controlled from (where the 'real heart' of the company is).
And if it's from the UK, your offshore company will be requalify as a UK company.

 

[cariboo]

Exactly - if you're a UK resident, your company will be treated as a UK one for tax purposes, even if it is offshore. Including corporation tax.

Unless your company is truly managed from outside of the UK.

But even if that's the case, you will probably have to open a bank account in your name for the company. Which means the taxman can easily associate your name with the company even if you have a fake director abroad.

Also if you work through an agency, make sure you ask them first if they accept to work with a non UK limited company

 

[Martin Everson]

For 40-50k...why bother. There is nothing you can really do from the UK anyway to avoid taxes in that income range. Just suck it up and pay your taxes until you are willing to move country.

Wait for Brexit and pray the UK government introduces zero rate corporate tax. Corporate tax anyway is only around 9% of all tax revenue collected in the UK.

 

[Juoffshore]

Wait for Brexit and pray the UK government introduces zero rate corporate tax

For 40-50k...why bother. There is nothing you can really do from the UK anyway to avoid taxes in that income range. Just suck it up and pay your taxes until you are willing to move country.

Wait for Brexit and pray the UK government introduces zero rate corporate tax. Corporate tax anyway is only around 9% of all tax revenue collected in the UK.

He should pray a lot ! Uk gov has already announced the CT will go at 17% in 2020...

 

[Martin Everson]

lol

17% from 20% is not going to help the UK. The UK will have no choice but to become a tax haven despite what the government says. It already is a major offshore centre for dirty money laundered via real estate in London. It might as well finish the job properly.