Do controlled foreign company rules apply in this situation?

hermante

I, as a UK resident, own a company incorporated in country X.

The company operates solely in X where it owns property and rents it out. All income and gains remain in the company within country X, the company pays all relevant taxes there.

The company does not pay me a salary or dividends.

In this case, does me being a UK resident require the company to file and pay taxes in the UK?

I realise this may be complicated and would require proper legal/tax advice if it was ever set up, but is the situation any different if it is a trust in country X rather than a company?

Can anyone recommend somewhere to read more about this, in order to prepare for speaking to lawyers/accountants?

Jeremy535897

CFC rules apply to overseas companies controlled by UK companies. I'd be more worried about the transfer of assets abroad legislation, that would mean you are taxed on the company's income:
https://www.legislation.gov.uk/ukpga/2007/3/part/13/chapter/2

ORC

You'd also need to look at the residency position of the company - even though it is incorporated overseas, it may still be considered UK tax resident if effectively managed from the UK. See: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm120000 

Jeremy535897

ORC said:

You'd also need to look at the residency position of the company - even though it is incorporated overseas, it may still be considered UK tax resident if effectively managed from the UK. See: https://www.gov.uk/hmrc-internal-manuals/international-manual/intm120000 

It should be possible to avoid this trap with a non-trading company that simply owns property abroad. I think it is much more likely that the company's income will simply be assessed on OP.

ORC

Well, ultimately it's a question of fact, but I've certainly dealt with numerous non-trading non-UK incorporated companies that were resident in the UK.

Lots of issues to think through for the OP!

Jeremy535897

ORC said:

Well, ultimately it's a question of fact, but I've certainly dealt with numerous non-trading non-UK incorporated companies that were resident in the UK.

Lots of issues to think through for the OP!

Yes, we haven't even touched on which territory is involved, and the impact of double tax agreements (which won't help with the issue I raised). I think OP needs to consider carefully why he wants to use such a structure, as it appears it hasn't happened yet.