Moving away from the UK, leaving UK LTD open, and exit tax

[zerosum]

So, your UK company will still be operating and paying all taxes and charges, submitting accounts etc. You'll then set up an off-shore shell company (incurring additional taxes & charges) to launder the money out of the UK and into your bank account.
Except, you might only be out of the UK in terms of owning a holiday apartment somewhere that you've visited once a year, while claiming that is where you live.

Looks like we're in for a Friday of fun questions in accounting.

I'm sure it gave you some satisfaction to write this post, but there are a few logical problems that follow. If what you wrote were *absolutely* correct, without any possibility of nuance (i) branches would not be allowed; (ii) the very fact of asking HMRC for permission to move per treaty residence would not arise because it would not be allowed. Laundering money is reasonably difficult when you declare all sources of revenue and retention to both countries.

Moreover, per the terms of the EU-UK withdrawal agreement I do need to be completely abroad and the consequences of messing this up are quite a bit more severe than a bit of extra tax.

Finally, your reference to 'holiday apartment' without asking me whether I have homes in the UK (no) demonstrates to me that you do not understand the meaning of 'home' per the SRT. 'Home' can most certainly include an Airbnb and even a hotel *if booked for more than 90 days* and hence available for one's use. Not that this is even my case.

Other than that, great post.

Back to my original question; in spite of posts like this one, I've had a lot of professional advice, but I'm trying to add experiential data from people who may have dealt with situations where the question of exit taxes came up.

[zerosum]

May I ask, do you have professional tax advisors opinion on it?

Sadly my UK accountant has said HMRC wouldn't accept this kind of a 'structure'. Instead, he said I might consider creating an overseas branch of my UK Ltd. and claiming UK tax back by it. I didn't pursue this yet, as this is more of a solution if you want to trade with overseas clients/businesses, which I don't intend.

The best solution is to trade using a company in your home country, but, I imagine, your agency has declined it (such I mine did).

Most UK accountants, particularly the ones recommended around here, do not have cross-border expertise.

Is it allowed to have a UK company with non-resident directors? Yes. The issue (per this thread) is if the only director was UK tax-resident and then moved away, as the company becomes treaty non-resident, which is something that requires permission *before the fact*. It sounds like this is your case. Did you ask HMRC about this before leaving?

What you are fundamentally asking is: can such a UK company invoice for work in the UK? Yes. Can a company abroad then bill the UK company for the services performed? I have had multiple confirmations that it can, including paid. There are still complications, like the probable need to file accounts in both places. After all, this happens now. Any time your UK Company has paid for a service from a company based abroad.

Also the fantasies posted earlier in the thread about doing this as some sort of offshore arrangement while still remaining in the UK are obviously illegit, so thanks for that contribution.

IMO the issue is exit tax, rather than the legitimacy of the structure.

[Lance]

but I'm trying to add experiential data from people who may have dealt with situations where the question of exit taxes came up.

There are no exit taxes as such from the UK.

There may be taxes on bringing cash into country B. Check this. There may also be limits on how much you can bring.

If live in Portugal you can get very good tax breaks on your dividends.

You will have to UK tax self-assessment. You will have to pay tax on your income.


if you google "uk limited company non-resident director tax" the 3rd link has this...

Will director remuneration be subject to UK tax?

Yes. A non-resident director of a UK company is an office holder, and
any income receieved in respect of this UK role should be treated as
earnings in the UK and subject to UK wage tax withholding (PAYE).
Double tax treaties do not usually offer any protection in this regard.
However, if the individual is not remunerated in any way, either by the
UK or overseas entities for the UK directorship, there should be no
UK tax liability.
In certain circumstances, HMRC could try to allocate a proportion of
the director’s total pay to the UK directorship role (e.g. based on the
time spent working in the UK). In practice this is difficult for HMRC
to do, as it is essentially a question of fact and is based on the
commercial reality and judgement. It is however, recommended that
the director arrangements are well documented, to ensure this risk is
reduced.

[zerosum]

There are no exit taxes as such from the UK.

There may be taxes on bringing cash into country B. Check this. There may also be limits on how much you can bring.

If live in Portugal you can get very good tax breaks on your dividends.

You will have to UK tax self-assessment. You will have to pay tax on your income.


if you google "uk limited company non-resident director tax" the 3rd link has this...

INTM120070 - International Manual - HMRC internal manual - GOV.UK

DTAs always override domestic laws.

[WTFH]

I've had a lot of professional advice

Have you taken paid professional advice from people where you have given them more than just snippets of the story?

And what has that advice been?

Have they mentioned the MLI to you?

[ContractorPL]

Most UK accountants, particularly the ones recommended around here, do not have cross-border expertise.

Is it allowed to have a UK company with non-resident directors? Yes. The issue (per this thread) is if the only director was UK tax-resident and then moved away, as the company becomes treaty non-resident, which is something that requires permission *before the fact*. It sounds like this is your case. Did you ask HMRC about this before leaving?

What you are fundamentally asking is: can such a UK company invoice for work in the UK? Yes. Can a company abroad then bill the UK company for the services performed? I have had multiple confirmations that it can, including paid. There are still complications, like the probable need to file accounts in both places. After all, this happens now. Any time your UK Company has paid for a service from a company based abroad.

Also the fantasies posted earlier in the thread about doing this as some sort of offshore arrangement while still remaining in the UK are obviously illegit, so thanks for that contribution.

IMO the issue is exit tax, rather than the legitimacy of the structure.

My situation is different (I set up a UK LTD and started trading while overseas as was unable to travel due to covid. My client has allowed me (as an exception) to work remotely until lockdowns finish.

The answer from my UK accountant (a big awarded company might be caused by the lack of the cross border expertise but my also be caused by the fact that I would be substantially better off paying (much lower) taxes in Poland instead of in the UK.

I'm not sure your LTD company loses its residency automatically when you move away. Look at the DTA - chapter about permanent establishment. Will you have a fixed place overseas where you carry out business with regularity (DTA with Poland gives examples (office,branch, workshop) ? Wile you stayed overseas, if you visited UK not only to hold board meetings but also to carry out a full thought process about running your company and document it properly, it can be argued the place of management is the UK (183 day rule has nothing to do with company's residency as far as I know).

[ContractorPL]

Have you taken paid professional advice from people where you have given them more than just snippets of the story?

And what has that advice been?

Have they mentioned the MLI to you?

I have an MLI question - if a residence country judges I should pay my company's taxes there (which I haven't done as I paid them in the UK), will they convince HMRC to return its tax (so I can then pay it in my host country). Or am I charged twice?

[WTFH]

I have an MLI question - if a residence country judges I should pay my company's taxes there (which I haven't done as I paid them in the UK), will they convince HMRC to return its tax (so I can then pay it in my host country). Or am I charged twice?

It is not their job to do the convincing, it's yours.
You'd take the judgement of the tax inspectors in your resident country on your specific case, then provide that to HMRC.

But, if you're asking whether you can voluntarily choose to backdate the payments, then I would suspect the answer is no, since you haven't been charged twice in the past.

[zerosum]

Have you taken paid professional advice from people where you have given them more than just snippets of the story?

And what has that advice been?

Have they mentioned the MLI to you?

No it made the most sense to me to give him only the barest idea. Most of the conversation was spent talking about my holiday home.

[Paralytic]

No it made the most sense to me to give him only the barest idea. Most of the conversation was spent talking about my holiday home.

The same as this thread then