IOM vs UK company?

[LordCharles]

Hi,

I am not a "contractor" (whatever that means?) but run a regular ecommerce site.
Was wondering if there would be any point in using an Isle of Man company owned by an insurance fund,
with directors in the Isle of Man...compared to having a UK LTD?

Would there be any risks associated with having the company in the Isle of Man? (I live in the UK - might also
want to hire people in the UK). This option was supposed to give me a 0% tax rate. But not sure how legal
it actually is in reality.

[cojak]

IOM vs UK company?

Hi,

I am not a "contractor" (whatever that means?) but run a regular ecommerce site.
Was wondering if there would be any point in using an Isle of Man company owned by an insurance fund,
with directors in the Isle of Man...compared to having a UK LTD?

Would there be any risks associated with having the company in the Isle of Man? (I live in the UK - might also
want to hire people in the UK). This option was supposed to give me a 0% tax rate. But not sure how legal
it actually is in reality.

Any risks? Just have a look here to see the risks come home to roost: HMRC Scheme Enquiries

Do you know how long some of these people have been involved with HMRC demanding a huge amount of tax from them? Over 12 years.

If you read that and still want to get involved take a look at this post: Tempted to join a contractor* scheme? Ask the following questions

*Contractors are (generally) one man bands providing services to companies. Your tax affairs will be similar to theirs in this matter I would imagine.

[LisaContractorUmbrella]

If you live and work in the UK then your tax liability is in the UK. End of.

[northernladuk]

Convoluted business arrangement to minimize tax. Sounds like a winner that.

[ASB]

Incorporate an entity in the IOM
Vest the property rights in it
Licence those to a UK company, coincidentally for the approx value of UK profits

You then have the IOM entity accumulating those profits legitimately and subject to that taxation regime

That's what you wanted to hear right ?

However, the question is how do you get your mitts legitimately on the filthy lucre ?

Depending on the ownership structure these can be paid to the owners. But it would attract a tax charge. So you are no better off.

There are also a number of issues related to taxation when the property is transferred and there are also implications with transfer pricing. They may be surmountable.

Ultimately, though you may be able to generate some profit in the IOPM it doesn't help YOU personally get hold of it without incurring personal income tax.

Though if you can run to getting yuorself resident in Monaca you'd be OK. They don't tax foreign dividends there.

Bottom line. If you are a large multi national with an army of tax lawyers then it will work for a while. If you are an individual business of modest means then the costs and issues with fighting off HMRC etc make it largely pointless.

[LondonManc]

General rule: if it looks too good to be true, it usually is.

[BrilloPad]

Are you as big as google or starbucks?

If not, then forget it.

8 years now HMRC have been after me. Probably that many to go. At least.

[jamesbrown]

If you live and work in the UK then your tax liability is in the UK. End of.

Yep, and even if you don't, it might be (for capital gains and dividends) on your return.

[LordCharles]

I thank you all for your replies. Much appreciated.

This advice was given to me by one of the top firms and would set me back $xx,xxx a year.
I am not domiciled in the UK since my father is not British. Their advice was for me to work
as a "consultant" for the IOM company and get paid a fee to an offshore bank account.

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?

[Iliketax]

This advice was given to me by one of the top firms

There is no easy way to say this. But. Well, I'm going to.

I don't believe you.

If I'm wrong I'll donate some money to a charity of your choice.