IOM vs UK company?

[jamesbrown]

If not, I could keep all the profits in the company and then don't cash out until I leave the UK
and move to a tax haven. I am going to use this strategy regardless. At least that one will work?

Not necessarily. That is, unless you plan to move there permanently, i.e. for a very long time, and sever most/all UK connections, without visiting regularly. These would be "pre-departure profits", covered by the Temporary Non-Resident rules. As a non-resident director of a UK close company (owning more than 5% of the share capital), any dividend distributed while non-resident would be subject to UK tax in the year of return to the UK, unless you were non-resident for more than 5 years or for fewer than 4 of the 7 years prior to departure (IIRC). Unless you know what you're doing and, essentially, you plan to leave permanently, you could be in for a nasty shock on your return. Also, bear in mind that once you leave, you can't be returning to the UK regularly or have many connections here, because the rules that determine non-residency are much tighter than they used to be.

[ASB]

If you are non dom are you taxed on the remittance basis?

One substantial thing you must deal with is to ensure the iom company does not hecome uk resident.

if you are resident in the uk and exercise control over it then this may be tricky.

if it were straight forward and cost effective then it would be much more common.

what you want can be done with a lot of expensive advice running costs and a bespoke solution. Any off the shelf solution is likely to cause difficulties at some point and defending it will be expensive. If you did win you still get to pay the costs.

if you dont you get to pay those and the disputed tax and penalties. Depends how lucky you feel really.

[Fred Bloggs]

Move to the IoM!

TBH, I think the OP needs to think about moving lock stock and barrel to the IoM. Sell any property on the mainland etc and cut ties with the UK as far as possible. I know someone who moved his business and family to the IoM and he refers to it as paradise island. Running an eCommerce company can be based anywhere. Good to the OP, I say. I wish I could do it.

[LordCharles]

If you are non dom are you taxed on the remittance basis?

One substantial thing you must deal with is to ensure the iom company does not hecome uk resident.

if you are resident in the uk and exercise control over it then this may be tricky.

if it were straight forward and cost effective then it would be much more common.

what you want can be done with a lot of expensive advice running costs and a bespoke solution. Any off the shelf solution is likely to cause difficulties at some point and defending it will be expensive. If you did win you still get to pay the costs.

if you dont you get to pay those and the disputed tax and penalties. Depends how lucky you feel really.

Sorry, I was out of internet for a few days attending a wedding.

Are you saying that if it would be taken up in court and the HMRC would decide that the company is and has been a resident in the UK,
all that happens is that I will have to pay the missed taxes? There is no jail time, hefty fines etc?

Lets say you made £5,000,000 in profits during a period of 5 years. After 5 years, the court decides that the company was resident in
the UK all along. What would be the loss?

If all I can lose are some legal fees, I don't see why not to try it. The potential loss is relatively small, the potential upside is huge.

[BrilloPad]

Sorry, I was out of internet for a few days attending a wedding.

Are you saying that if it would be taken up in court and the HMRC would decide that the company is and has been a resident in the UK,
all that happens is that I will have to pay the missed taxes? There is no jail time, hefty fines etc?

Lets say you made £5,000,000 in profits during a period of 5 years. After 5 years, the court decides that the company was resident in
the UK all along. What would be the loss?

If all I can lose are some legal fees, I don't see why not to try it. The potential loss is relatively small, the potential upside is huge.

There would be interest and legal fees.

The legal fees would be your biggest worry. You would have to cover your costs and that of HMRC.

You would also have stress and worry.

You would also have to pay up immediately via an APN. So if you win you would not see the money for 10 to 20 years. But all your costs come immediately.

[Scruff]

Gladiators on the internet are the International Tax Advisors of the future. I would suggest paying for Legal Tax opinion by one of the silk members of the Bar, as a start, if you really have the intention of operating through an IoM incorporated Body.

[ASB]

Sorry, I was out of internet for a few days attending a wedding.

Are you saying that if it would be taken up in court and the HMRC would decide that the company is and has been a resident in the UK,
all that happens is that I will have to pay the missed taxes? There is no jail time, hefty fines etc?

Lets say you made £5,000,000 in profits during a period of 5 years. After 5 years, the court decides that the company was resident in
the UK all along. What would be the loss?

If all I can lose are some legal fees, I don't see why not to try it. The potential loss is relatively small, the potential upside is huge.

It all depends. HMRC don't decide. The facts are decide in court/tribunal and the law applied to those. HMRC may push a civil route or they may pursue a criminal route. In any event interest and penalties (which can be very large will apply).

On 5m you are potentially looking at 1m in unpaid taxes. Penalties up to 100% and interest.

The level of legal fees you expose yourself to depends how far you want to go. It would be quite easy to have a 7 figure bill if you want to push it a long way.

[john@UKCA]

Tax Avoidance Scheme with Dutch Sandwich

Did anyone catch the TV programme a few weeks back where a town took on the Taxman looking to establish a IOM tax haven?

They went to IOM headquarters for Starbucks (I think it was ) and asked for some coffees.

[LisaContractorUmbrella]

It all depends. HMRC don't decide. The facts are decide in court/tribunal and the law applied to those. HMRC may push a civil route or they may pursue a criminal route. In any event interest and penalties (which can be very large will apply).

On 5m you are potentially looking at 1m in unpaid taxes. Penalties up to 100% and interest.

The level of legal fees you expose yourself to depends how far you want to go. It would be quite easy to have a 7 figure bill if you want to push it a long way.

And even if you win, the chances of getting your legal costs back from HMRC are slim to none

[Eirikur]

I am going to use this strategy regardless.

Please post back in a couple of years from HM prison.
Ofcourse the mods are happy to provide this thread to HMRC as evidence you were deliberately trying to avoid tax