Moving away from the UK, withdrawing dividends and closing company

[Iliketax]

Im keen to understand Ramsay because that could be applied to anything and as I already asked about the well known tax dodge of moving personal property from personal name to Ltd to avoid S24 tax - That is happening up and down the country and yet it is purely for tax avoidance reasons. So far I have not had a satisfactory answer on why that is allowed if Ramsay holds true

If someone genuinely transfers property to a company and suffers the tax consequences of transfering property to a company then the Ramsay principle will not change that. The tax consequences of that would typically be (i) CGT on disposal (ii) SDLT on acquisition (on market value), (iii) corporation tax in the hands of the company, (iv) benefit in kind rules apply (if relevant), etc.

If instead you create an SCSp, transfer the beneficial interest in the property to the SCSp, admit the company as a member of the SCSp and makes a capital contribution to it, revalue the property, change the capital profit sharing ratios of the SCSp and then drawdown your revalued capital account then Ramsaywill be relevant. Probably not though as specific anti-avoidance legislation will tax it anyway.

As for your question about how it helps - Think about it for a minute :


1) I have £1 share which has a market value of £100 (for arguments sake).
2) I could take the money out as a dividend and therefore reduce the value of the share but I would have to pay tax in the foreign jurisdiction (UK does not charge divi tax or capital gains tax)
3) If however I sold the £1 share to CompanyB for £100 I have a capital gain which is neither taxed in the UK or Swiss. I then receive £100 from Company B for the share holding in CompanyA. Of course company B would have funds for this either in upfront cash or via a negative director loan

So it makes a very big difference on which way to play this as dividends are expensive and capital gains are tax free

Ah, I read your earlier post as saying that but misread the one I quoted as saying you were selling it for £1. I have no idea what the tax treatment is in Switzerland but from a UK perspective you wil not have a capital gain but income because of the transactions in securities rules. So if you were ever to come back to the UK while the temporary non-resident rules apply to you, you would pay tax at up to 38.1% not 10% or 20%.

[eek]

I have no idea what the tax treatment is in Switzerland but from a UK perspective you wil not have a capital gain but income because of the transactions in securities rules. So if you were ever to come back to the UK while the temporary non-resident rules apply to you, you would pay tax at up to 38.1% not 10% or 20%.

So the great unknown is if HMRC regards it as income and not a capital gain how will the Swiss tax authorities see it? I suspect it would be seen as income

[Fred Bloggs]

So the great unknown is if HMRC regards it as income and not a capital gain how will the Swiss tax authorities see it? I suspect it would be seen as income

That's a fairly easy one to answer, just consult the DTA.

[NowPermOutsideUK]

Ah, I read your earlier post as saying that but misread the one I quoted as saying you were selling it for £1. I have no idea what the tax treatment is in Switzerland but from a UK perspective you wil not have a capital gain but income because of the transactions in securities rules. So if you were ever to come back to the UK while the temporary non-resident rules apply to you, you would pay tax at up to 38.1% not 10% or 20%.

Many thanks ILiketax - very helpful - And thank you eek for explaining that income tax to CG has been tried many times - I do realise that but I am in a very blessed position where I can take advantage of no CG in UK and swiss

Just a final question please on my side - Leaving aside the Swiss tax system for the time being and concentrating on UK HMRC I understand you are saying that if I did sell shares from companyA to companyB it would be classed as income and not CG?

If that is the case then I do not understand your 10% / 20% point?

Just to clarify :

1) I will not come back during five years (as I have already been here for three plus years and can hang around for the tax saving if needed) so temporary non-resident rules are not relevant.

2) If this is income then I am already a higher rate tax payer in UK due to some rental income in personal name so I obviously cannot pay higher rate tax and will instead keep the profits retained and pay myself salary and pension when I return to UK.

[Iliketax]

That's a fairly easy one to answer, just consult the DTA.

No, it would be based on Swiss domestic law.

[Iliketax]

Just a final question please on my side - Leaving aside the Swiss tax system for the time being and concentrating on UK HMRC I understand you are saying that if I did sell shares from companyA to companyB it would be classed as income and not CG?

If that is the case then I do not understand your 10% / 20% point?

Yes, it's likely to be treated as income and not CGT.

The rate of tax is only relevant if you come back to the UK before the end of the temporary non-resident period (of five years).