Avoiding Tax by Moving Country?

holly_hobby

With any advice sought, one should never just rely upon a free forum, as you are unable to quanitfy the position of the individual providing it - and seeing as you need specialist off-shore advice, your decision to now pay for professional guidance is wise.

The basics of any offshore income - is that as soon as you bring it in to the UK you are taxed on it - to avoid being taxed twice you seek countries with UK double taxation treaties.

I've provided HMRC guidance for you (you may req prof guidance to fully understand the terms discussed) :- http://www.hmrc.gov.uk/worksheets/sa106-notes.pdf

Hope this helps

Holly

antrobus

bobwilson wrote: »

In fact I have checked the UK regs on foreign dividends; if you're resident in UK, they're treated the same as UK dividends in terms of tax purposes.

Well if you're happy I'm not going to disabuse you. I make no pretence to understanding the rules on the taxation of foreign dividends.

bobwilson wrote: »

If you register your Ltd. business in IOM, it will be resident in the IOM, not the UK.

Your limited company may well be resident in the IOM, but where your business is located is a different question. A lot depends on what kind of business you're talking about. You might be talking about some kind of 'virtual' internet business in which case it ain't that difficult to shift it 'offshore'. On the other hand, if the business consisted of let's say, a chain of retail shops, then it's a bit trickier.

bobwilson wrote: »

I'm learning that most people on these forums don't really know much detail about off-shore tax planning, which is a surprise for me, on moneysaving forums. I'm looking for some specialist off-shore tax advisors now and will let everyone know what I decide to do. It will be useful for many other people on these forums who run e-businesses.

To be blunt, it's a bit much to expect detailed advice on off-shore tax planning from an internet forum, particularly if you persist in talking in generalities about 'avoiding tax by moving country' and don't provide any detail yourself. The best you could hope for in any case would be some general indicators coupled with the instruction to seek proper professional advice should you wish to actually do anything.

BoGoF

antrobus wrote: »

To be blunt, it's a bit much to expect detailed advice on off-shore tax planning from an internet forum, particularly if you persist in talking in generalities about 'avoiding tax by moving country' and don't provide any detail yourself. The best you could hope for in any case would be some general indicators coupled with the instruction to seek proper professional advice should you wish to actually do anything.

Indeed it it, between this and your other posts you seem to be wanting free professional advice, which does not exist. I suggest you speak to an accountant.

antrobus

BoGoF wrote: »

Indeed it it, between this and your other posts you seem to be wanting free professional advice, which does not exist. I suggest you speak to an accountant.

I was wondering whether I should have mentioned Controlled Foreign Companies, but then it was never clear to me whether the OP had a company he wanted to move abroad, or whether he wanted to move abroad, or both, or whatever.

agrinnall

antrobus wrote: »

I was wondering whether I should have mentioned Controlled Foreign Companies, but then it was never clear to me whether the OP had a company he wanted to move abroad, or whether he wanted to move abroad, or both, or whatever.

I personally think the OP is a bit of a fantasist who has no intention of doing any of the things he's chuntering on about but is pretending he might. I'm getting very bored with him (and most of the other posters who claim to want to leave the country - I'll exclude Bendix as he's actually done it).

bobwilson

holly_hobby wrote: »

With any advice sought, one should never just rely upon a free forum,

I'm not

holly_hobby wrote: »

seeing as you need specialist off-shore advice

There should be many people running e-businesses, its not an unusual position. I'm not relying on the forums of course, but its good to know what others have done.

holly_hobby wrote: »

The basics of any offshore income - is that as soon as you bring it in to the UK you are taxed on it

No. The UK does not tax non-residents on foreign income brought into the UK.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_078447
"If you're not resident
You'll pay tax on your income from:

• work you do in the UK
• UK pensions
• UK investments
• rental income from UK property

You won't pay tax on your overseas income if you bring it into the UK."

See also 12.2.2 of HMRC6 guidelines ''Remitted income and gains'':
This term is relevant only if you are a UK resident

Read the IR20 and HMRC6 booklets and UK government website.

holly_hobby wrote: »

I've provided HMRC guidance for you... Hope this helps

Thanks for your help, its appreciated, I don't mean to sound ungrateful but some of your advice seems to be incorrect, see above, the main point of which is: as a non-resident, "You won't pay tax on your overseas income if you bring it into the UK." - this was taken from UK government information, link provided above. What makes you think otherwise?

antrobus wrote:

Well if you're happy I'm not going to disabuse you. I make no pretence to understanding the rules on the taxation of foreign dividends.

It's not about being happy. I'd only ever provide advice if I was sure it's true.

antrobus wrote:

You might be talking about some kind of 'virtual' internet business in which case it ain't that difficult to shift it 'offshore'.

Indeed, I am. When your only dependency is having internet, it seems a shame to waste it.

antrobus wrote:

To be blunt, it's a bit much to expect detailed advice on off-shore tax planning from an internet forum

I don't agree. But at the same time, I don't really expect detailed advice, I was expecting more people on here to have done something similar though, whether it be moving abroad or just setting up an ebusiness abroad, or any combination.

antrobus wrote:

you persist in talking in generalities

Quite the contrary, I'm looking for specifics.

antrobus wrote:

and don't provide any detail yourself

I'm here, if you need more detail, just ask. I run an e-business, only thing I need is fast internet. I think this has wider repurcussions than just me though, there must be many in a similar position.

antrobus wrote:

The best you could hope for in any case would be some general indicators coupled with the instruction to seek proper professional advice should you wish to actually do anything.

Not really. The best you could hope for is that someone else also runs an e-business, and has specific advice. I would never solely rely on a forum. E-businesses are quite common these days.

BoGoF wrote:

between this and your other posts you seem to be wanting free professional advice

No. I'm just looking for insight from people in a similar position. If you run an e-business, and used off-shore tax planning, what did you end up doing? What options did you consider? No one is expects free professional advice. It should also be mentioned that it's possible to get bad professional advice. It's always a good idea to look around for ideas.

antrobus wrote:

it was never clear to me whether the OP had a company he wanted to move abroad, or whether he wanted to move abroad, or both, or whatever.

I'm here, just ask. I'm looking to cut my tax liability. I'm considering the possibilities, moving abroad, or even just placing a company abroad are all possibilities I'm willing to consider. Just looking for tried and tested ideas right now. If you run an e-business and have done any off-shore tax planning, what do you do? What options did you consider? What did you end up choosing and why?

agrinnall wrote:

I personally think the OP is a bit of a fantasist who has no intention of doing any of the things he's chuntering on about but is pretending he might.

What would be the point in that?

agrinnall wrote:

I'm getting very bored with him (and most of the other posters who claim to want to leave the country

If you're bored of threads wanting to leave the UK, then why do you click on them?

agrinnall wrote:

I'll exclude Bendix as he's actually done it).

So until the moment I actually do it, you'll be bored of my threads. Lovely.

Pennywise

bobwilson wrote: »

No. Dividends you receive in UK are taxed in UK. You can receive up to £35,000 almost tax-free, the rest are taxed at UK dividend rates. You're benefiting from no corporation tax in Isle of Man, which reduces your tax liability massively.

Isle of Man isn't in the UK - http://en.wikipedia.org/wiki/Isle_of_Man

and

The tax deducted from the dividend isn't "admissable for credit" under the double taxation treaty - http://www.hmrc.gov.uk/manuals/dtmanual/dt9955.htm

As for getting a flat in the IOM - that will only work if you really do all the administration and management from there. I think you'd have a very hard job "proving" to HMRC that all the business work was done there if you continued to "live" in the UK. Wouldn't it adversely affect your business if you didn't answer emails or phone calls or did any admin work whilst you were in the UK - can you business really run itself in the intervening periods whilst you were back in the UK?

Don't you think that other people have considered offshoring to IOM? It's been a hot topic for at least the 30 years I've been an accountant. We've all been there and got the T shirt. I've only ever had one client who managed to do it and that was because they were so big, they employed administrators and managers whose roles were moved to offices in the IOM so that the work was actually done in the IOM - the owners (who were hands-off shareholders) just went over every month for management meetings and held their directors meetings and AGMS over there as well. You wouldn't believe how much time the HMRC tax inspector spent trying to argue that it was a UK based trading company because the directors/shareholders were still resident in the UK - we had to produce proof that they really didn't get involved in any of the day to day operations by proving that their IOM staff did it all. HMRC aren't idiots - they've seen it all before!

At the end of the day, for an IOM company to work if you're just a small one man co, you have to move there and live there as well, i.e. both you and your business must become IOM resident. That works very well and is very popular, but again is only for the high wealth people as it's not cheap to live there and not cheap to travel back to the UK.

bobwilson wrote: »

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_078447
"If you're not resident
You'll pay tax on your income from:

• work you do in the UK
• UK pensions
• UK investments
• rental income from UK property

You won't pay tax on your overseas income if you bring it into the UK."

You've just answered your own question. If you're hoping to continue to live in the UK, then you're working in the UK and the income derived from it is taxable in the UK. For your business profits not to be taxed in the UK whilst you reside here, you'd have to do all the work to derive those profits abroad or you'd have to have staff doing the work abroad on your behalf.

antrobus

bobwilson wrote: »

I'm looking to cut my tax liability. I'm considering the possibilities, moving abroad, or even just placing a company abroad are all possibilities I'm willing to consider.

OK then. If you just place the company abroad it won't do you any good as you'll probably be caught by CFC legislation. If you just move abroad, then your company will remain subject to UK tax. To escape UK tax both you and your company will have to offshore, and even then it will depend on exactly what your company does. ('Ebusiness' is a marketing buzzword that doesn't mean much at all.)

olivetti

bobwilson wrote: »

Thanks! sounds like an interesting idea, but why not just move to Andorra? I can be a sole trader there tax free, can I not?

Because Andorra is dull and boring, as are most 'tax havens'. You don't pay certain taxes for a reason; it is the only way they can get people to go there. Most go to pay less don't last very long because their friends are in the UK there are cinemas, theatres, decent(ish) roads and transport and so on.

You seem to think that you get nothing for your tax but I would guess your customers (direct or indirect) make use of state schools, NHS etc that would not be in a position to buy your goods and services if those services if they did not exist.

While not all tax is spent wisely it gives the foundation of the whole country; It is not all about you. You seem to want to take but give nothing back.

If that is your real attitude then go. You won't be missed. :D

sunshinetours

bobwilson wrote: »

Philisophical discussions about generalities of tax havens aren't really of use; tax planning is all about specifics.

All the best,

Indeed so pay to see a specialist in this area. You will not get this sort of specific advice you can rely on via a discussion group.

Setting up suitable foreign companies in "tax havens" is not a cheap exercise in itself and the rules regarding your own tax residency will also be relevant.

Whilst I understand you have come here for advice your early postings seem to indicate a distinct lack of understanding about the most basic elements of tax and how VAT/Corp tax and PAYE/NIC all interact in a basic company structure.

The figures you are talking are not small so please pay for some professional advice would be my specific advice to you