Tax on rental income if property owned by a shell company in tax haven

Housebear51

Simple tax question about the rent on this house talked about in the press. The government are paying 2grand a week to an African family so they can live in this expensive house. The media are trying to track down the owner of thwe house. Whoever the owner is, if the rent goes to the owner who is out of the country, does he still pay tax on the income?

Quote from that Dmail story

"The revelation that a foreign national, with unspecified tax status, is benefiting from taxpayer-funded rent payments will heighten concern about Britain’s broken benefit system.
The Mail on Sunday tracked down Dr Roman Keckeis, a lawyer acting for Brophy.
Dr Keckeis, who lives in a £5million mansion over the border in Austria and who drives a £120,000 Maserati sports car, is known as Dr Fixit and regarded as one of the shrewdest lawyers in Liechtenstein.
He declined to talk in detail about the house or reveal the identities of anyone connected with the Brophy group.
He said: ‘We manage assets and our clients expect confidentiality. I can confirm the house was bought as an asset. More than that I cannot say.’
Liechtenstein, in an Alpine valley between Switzerland and Austria, prides itself on its secrecy. It is estimated to hold £150billion of the world’s assets in its banks and 5,000 Britons are thought to have deposited more than £3billion in the principality simply to avoid paying tax."

dailymail.co.uk /news/article-1295601/Somali-refugee-given-2-1million-taxpayer-funded-house-owed-7-000-rent-previous-home.html

Mikeyorks

20 posts in the space of 24hrs and a lot quoting crap from the media.

Do you have nothing better to occupy you?

Pennywise

Almost certainly there is no tax coming back to this country from this rent because that's the whole point of these offshore companies - to hide the owners' identity. If the owner is a UK resident he should be paying income tax on it - but probably not telling HMRC so getting away with it. If the owner is non a UK resident, then there'd be no tax to the UK coffers anyway. I think it should be a condition of getting UK housing benefit that the property owner is a UK resident and paying UK tax - then at least the country gets something back for its generosity.

Housebear51

Pennywise wrote: »

If the owner is non a UK resident, then there'd be no tax to the UK coffers anyway.

Are you sure about that?

I know a Japanese woman who rents out her house in London, she told me she has to pay UK tax before the money goes to her in Japan.

Cook_County

Assuming the owner is non-UK resident then UK tax is withheld by the agent and paid directly to HMRC.

Housebear51

Cook_County wrote: »

Assuming the owner is non-UK resident then UK tax is withheld by the agent and paid directly to HMRC.

I had a chat with her, she hasnt got an agent but she does pay tax in the UK on the rent even though the tenant pays her rent to Japan.

But what about that house that the government is paying 2grand a week for an African family to live in?

Whoever the owner is, do they pay tax in the UK?

Quote from that Dmail story

"The revelation that a foreign national, with unspecified tax status, is benefiting from taxpayer-funded rent payments "

TM1976

Housebear51 wrote: »

I had a chat with her, she hasnt got an agent but she does pay tax in the UK on the rent even though the tenant pays her rent to Japan.

But what about that house that the government is paying 2grand a week for an African family to live in?

Whoever the owner is, do they pay tax in the UK?

Quote from that Dmail story

"The revelation that a foreign national, with unspecified tax status, is benefiting from taxpayer-funded rent payments "

Under corporate taxation tax is usually paid in the company's resident country, in some cases withholding tax is applied. I'm not sure if this is really witholding tax as I can't see why the company should have a liability for UK income tax and may be able to apply not to have tax deducted - not that sure on the non resident landlord scheme, perhaps other posters know better about this. The DM may want us to get upset about this but ultimately UK companies frequently benefit from not paying tax in the countries where income is derived.

Regarding the friend in Japan the UK will have a double taxation agreement with Japan so they will only have to pay tax on this income once either in UK or Japan. Japan has a higher rate of taxation than the UK so it's likely at least the tax deducted will be due. Not sure if this could be claimed back if the individual lived in a zero or lower tax country.

John_Pierpoint

Cook_County wrote: »

Assuming the owner is non-UK resident then UK tax is withheld by the agent and paid directly to HMRC.

.....and if no agent the tenant needs to know that he/she could become liable for the unpaid tax, if failing to deduct it from a foreign landlord.

RDB

John_Pierpoint wrote: »

.....and if no agent the tenant needs to know that he/she could become liable for the unpaid tax, if failing to deduct it from a foreign landlord.

I doubt that very much.

Even if that were true (I dont think it is) then most of these African families renting these 2grand a week houses have no idea about it.

Out of all the luxury houses that the government is paying rent on, nearly all of the high rent ones 1 or 2 grand a week goes overseas.

The tenants have no idea they may have to pay tax on their landlords houses.

http://www.dailymail.co.uk/news/article-1295601/Somali-refugee-given-2-1million-taxpayer-funded-house-owed-7-000-rent-previous-home.html

Anyway these African families havent got any money to pay the tax. They just live on handouts.

Cook_County

Failing to pay income tax can be a criminal offence - doubtless HMRC look for such offences.

kickwhamstunner

Housebear51 wrote: »

an African family

Why mention this? It's not remotely relevant to the question.