Closing Ltd Co and IOM Tax

[Wilmslow]

Hi,

I have an off-beat situation.

Been contracting for a few years - just started on a fixed term role paid to personal bank account outside of my Ltd Co in the Isle Of Man for 12 months - which may be extended. I am a registered IOM Tax Resident.

Now, I am looking about what to do with my current Ltd Co. My accountants suggest that as an IOM tax resident if I was to declare dividend it is to IOM rates, which is 0%. Need to have a good chat with my accountants tax advisor, but, I am also confused about the Corporation tax which is also a big fat 0% in the IOM.

Has anyone else had a similar situation in any country?

[piebaps]

First of all, get an IOM advisor. The system is totally different to the UK and you need someone with knowledge and experience of the IOM rules.

Company tax in the IOM is as you say 0%. As a resident however, if your company makes a dividend payment to you, it is subject to tax on you personally at whatever rate of tax you pay. The company itself has nothing to pay.

A guide to the IOM company tax system is here https://www.gov.im/media/365163/gn38...09-updated.pdf

[ShandyDrinker]

As others have said you need to get professional advice.

I'm most likely wrong but I would expect that even if you have a UK based Ltd the corporation tax owed would still be at the UK rate and not the Manx rate as presumably money was earned in the UK anyway.

I'd tread carefully thinking you'll pay Manx corporation tax rates for a UK Ltd.

Seek advice.

[Wilmslow]

I'm most likely wrong but I would expect that even if you have a UK based Ltd the corporation tax owed would still be at the UK rate and not the Manx rate as presumably money was earned in the UK anyway.


Seek advice.

Exactly what I thought, but my tax advisor from my accountants seems pretty certain that from the point of becoming an IOM tax resident that my Ltd Co does not come under UK tax, and I am completely down to the IOM. There may be a belt and braces wrinkle about changing the Ltd Co address.

To be frank it is probably a lot easier just to dormancy, pay the £50 a month to the accountants for that and to fire it up again next year.

[ShandyDrinker]

Exactly what I thought, but my tax advisor from my accountants seems pretty certain that from the point of becoming an IOM tax resident that my Ltd Co does not come under UK tax, and I am completely down to the IOM. There may be a belt and braces wrinkle about changing the Ltd Co address.

To be frank it is probably a lot easier just to dormancy, pay the £50 a month to the accountants for that and to fire it up again next year.

As you're on a fixed term IOM contract paying into a personal bank account all should be ok although you potentially need to be careful about double taxation, I don't think it's as cut and dried as you can just rock up to the IOM for a year, be tax resident during that time and then come back to the UK as and when you see fit. See articles such as https://www.expertsforexpats.com/exp...esidence-test/ for details. I'm sure others will be along shortly to opine.

For me it's a little concerning that the tax advisor is stating that the Ltd Co does not come under UK tax. Surely if it's a UK company, you pay UK corporation tax. If (you ever decided to open a) Manx Ltd company, you pay (or don't due to 0%) Manx Corporation Tax but beware, check out the fees in the IOM Government companies registry website. While the headline tax rate looks great, filing fees are much higher than you're used to in the UK.

I'd agree with the dormancy route, especially if your previous accounts have been filed, taxes paid and so on anyway.