UK Directors wanting to set up an offshore company that benefits from 0% tax, yet remain UK residents

[Jcwangel]

Hi,

Is it possible for the above to take place and benefit from the 0% tax rate that some tax havens provide?

Example scenario: Two UK directors of a successful company want to set up an offshore structure in UAE (or another 0% tax country), transfer all existing profits then close down the UK company and continue trading under the new structure in order to benefit from the nil tax rate. However both directors want to remain in the UK as residents.

I've read somewhere that the above is possible if all management functions of the new company are being undertaken/controlled in the country where the structure is set up and all directors meetings are held there.

Common sense is telling me this surely cant be possible for two UK residents to simply go abroad a few times a year, have a directors meeting in a hotel room then trade tax free back home for the rest of their working lives!?

Has anyone seen a successful case like this, as i would have thought the only way this could work would be if the directors became residents of the country which the new structure is to be set up. Or they became residents of another country with a 0% tax rate that is separate from where the new structure has been created ?


Many thanks.

 

[Kanayo]

Am interested in this.. Mauritius is a tax haven..Am standing by for a response

 

[wave]

You can look into Hong kong which works on territorial concept of taxation. Income earned in hk, taxed in hk or completely exempt and these are termed as Offshore Profit. However I would strongly recommend to study Revenue department website on the matter. Just google IRD hong kong and search offshore profit.

Or have I misunderstood you? you want to be "0" taxed in the UK or the other territory you wish to move to??
because to be HK "Offshore Company" you cant have central management making decision in land, nor do you have any permanent establishment.

Sorry if I misled you but feel free to ask more!

 

[Jcwangel]

You can look into Hong kong which works on territorial concept of taxation. Income earned in hk, taxed in hk or completely exempt and these are termed as Offshore Profit. However I would strongly recommend to study Revenue department website on the matter. Just google IRD hong kong and search offshore profit.

Or have I misunderstood you? you want to be "0" taxed in the UK or the other territory you wish to move to??
because to be HK "Offshore Company" you cant have central management making decision in land, nor do you have any permanent establishment.

Sorry if I misled you but feel free to ask more!

Hi Wave,

Apologies, I wasn't being specific enough with my question.

Focusing on offshore property investment companies. I've read that offshore companies that purchase assets and make profit in the UK are exempt from UK income taxes and UK IHT.

Firstly I'm looking to find out if this is actually true?

Secondly, if this is true, and the offshore company that wants to purchase assets in the UK is based in a 0% tax jurisdiction like the UAE, does this mean that there is literally no tax being paid as the profits are being sent from the UK straight to an account in the UAE where no income tax is paid on offshore profits?

Lastly, if both these scenarios are correct, can a UK resident set up a company in the UAE (example) then use this company to purchase properties in the UK avoiding any tax on profits all whilst its director remains a UK resident who simply "manages" the company from abroad. The main emphasis on this part of my question surrounds the "management" aspect/definition. E.g could the management of the offshore UAE company be defined and justified to hmrc by simply having a directors meeting in the UAE once a year or would there need to be a far more justifiable reason to qualify the offshore company for the exemption?
If this scenario is too sticky/complicated to get round hmrc would it be best if the director actually lives aboard and does not qualify as a uk resident?

Many thanks