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

[zerosum]

Has anyone dealt with moving away from the UK (becoming tax-resident abroad) but leaving their UK LTD open?

With most DTAs, if the company doesn't have other directors/shareholders, this can lead to the company becoming "treaty non-resident", *despite its country of incorporation*. DTAs always override domestic provisions. Exit taxes are expected and HMRC should be asked for permission in advance, or else penalties may be imposed.

However, I think that a premise of the notion of exit tax is that the company has significant assets like an email list, products, good-will/reputation. I suspect for most of those on this forum your end clients wouldn't even be able to name your company.

[wattaj]

Has anyone dealt with moving away from the UK (becoming tax-resident abroad) but leaving their UK LTD open?

With most DTAs, if the company doesn't have other directors/shareholders, this can lead to the company becoming "treaty non-resident", *despite its country of incorporation*. DTAs always override domestic provisions. Exit taxes are expected and HMRC should be asked for permission in advance, or else penalties may be imposed.

However, I think that a premise of the notion of exit tax is that the company has significant assets like an email list, products, good-will/reputation. I suspect for most of those on this forum your end clients wouldn't even be able to name your company.

Who will be running this company?

[zerosum]

Who will be running this company?

The main director and shareholder who incorporated it. Although other mechanisms could be considered.

[wattaj]

The main director and shareholder who incorporated it. Although other mechanisms could be considered.

I think that you need professional help. Also tax and legal advice. HTH.

[zerosum]

I think that you need professional help. Also tax and legal advice. HTH.

Agree, but one of the potential advantages of a forum like this is to hear from people who may have grappled with such issues in the past.

[WTFH]

Are you intending to keep the company trading?

...and just to clarify, before getting a vague answer...
1. Will you be invoicing clients using your company name/number?
2. Will money be going into your company?
3. Will money be coming out of your company to any shareholders/directors/employees?

[zerosum]

Are you intending to keep the company trading?

Ideally, at least for a few months.

My understanding is that I need a decisive break with the UK (like taking a job or apartment abroad). That has not yet happened. I could very deliberately ensure that I liquidate the company, or at least ask for final accounts and VAT/PAYE deregistration, before such a decisive break. That would make the exit tax problem go away. I make these remarks in the context of having gone through the SRT.

One issue is that I've heard from a couple of agencies that only want to deal with a UK registered company. Keeping the UK company around until the post-Brexit, post-IR35 ramp-up landscape settles a bit would be preferable.

[zerosum]

Are you intending to keep the company trading?

...and just to clarify, before getting a vague answer...
1. Will you be invoicing clients using your company name/number?
2. Will money be going into your company?
3. Will money be coming out of your company to any shareholders/directors/employees?

Yes
Yes
Can be controlled. The probability is that I would set up a foreignCo and bill the UkCo for work performed.



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[WTFH]

Yes
Yes
Can be controlled. The probability is that I would set up a foreignCo and bill the UkCo for work performed.

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.

[ContractorPL]

Yes
Yes
Can be controlled. The probability is that I would set up a foreignCo and bill the UkCo for work performed.

Sent from my iPhone using Contractor UK Forum

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).