Running your company from Ireland

[Flat Eric]

There's been a couple of cases in the news where big companies have moved their head offices over to Ireland to take advantage of the better tax regime.

As I understand it headline corp tax in Ireland is 12.5%.

Can anyone see any issues with me setting up an irish company and using it to bid or use agencies to source contracts in the UK.

Thx
Mark.

[Sockpuppet]

Probably exactly the same problem you get with using the IOM.

[Flat Eric]

Which is...

[ASB]

The answer to your question is that you can happily do exactly what you propose. Of course whether your potential clients will deal with an Irish based company is a different matter entirely.

Of course, what you are probably really asking is "can I get away with 12.5% corporation tax".

Firstly, let us assume you can and you are truly ensconced in the Irish Regime. If you are tax resident here then you are going to be taxed based on what is remitted. i.e. any salary and dividends paid. You just might be able to avoid Employers NI on any salary received, also you will need to check the DTA carefully to ascertain the tax treatment of dividends from a foreign country. You might get relief on any tax they have suffered, you might get credit. Or you might not. It is likely that you would only be able to make any potential savings by accumulating the funds within the Irish company.

Now, the question is whether your company is or is not in the Irish tax regime. The Irish will certainly think so.

I think it is quite likely that HMIT will think not. If the company is managed from the UK (or in the case of a one man band the directors - or shadows in the case of nominees being used - are resident in the UK) HMIT can take the view that it is a UK resident company and assess its income to CT (again you will still be paying Irish CT which you may or may not get credit for).

Large companies can "get away" with a bit more. The HQ is, of itself, one of the companies operations. It is more tricky than "we'll just remit all our profits to low tax regime". The UK authorities are still interested in obtaining CT on UK generated profits, but the company is interested in not making them, creating enough extra international cost to wipe it out.

You might be able to arrange your affairs to get in the same position.l

[Flat Eric]

Hmm..

Obviously, I'm no expert (really ).

But how can UK inland revenue want a say in the corporation tax that is paid by an Irish company.

I wouldn't, in any way, be trying to avoid UK income tax.

The new Irish based company would pay all it's dues to the Irish inland revenue.

As I said, I'm no expert but I can't see why this wouldn't work other than, as pointed out, you may not get agents / clients etc wanting to deal with an Irish based company. Having said that, there must be many businesses who have contracts with companies not incorporated locally. Surely some of these asian IT companies who bid for software contracts in the uk aren't registered in the UK.

I concede that it might make running the company slightly more difficult having it's directors resident in the UK, however, you could appoint nominees in Ireland.

[ASB]

I'm no expert either.

However, if a company is managed from the UK HMIT will likely view it as resident in the UK. It would be difficult to argue it isn't. They will consider the management in practice, so nominees don't get round it (if those nominees genuinely run and and control the business they may take a different view).

They can want a say because the law allows them to. I tried to find the document on HMRC website about company residence but couldn't, it is there somewhere though.

In the case of the large Asian software houses etc the situation is different, however in terms of their UK operations there are circumstances in which UK tax may be due.

[meridian]

Try here:

http://www.hmrc.gov.uk/manuals/ithma...4_ITHCONT3.htm

Specifically, http://www.hmrc.gov.uk/manuals/ithma...001_ITH300.htm

"it has long been recognised that the residence of a company is determined according to where its central management and control is to be found"

Asian software houses usually have their management and control in Asia (and a large percentage of their workforce, too). If you're a one-man band and you're UK tax resident then (usually) so is your company.

[meridian]

Btw, there appears to be some confusion over "Irish based" company and "Irish incorporated" company - they are not necessarily the same thing, just as an Irish-born person can still be UK tax resident if he/she lives in the UK.

[Flat Eric]

Thanks. I'll check HMRC's website for that document.

I can definitely see how, if a company has operations in the UK, i.e a ltd based here, then HMRC would definitely want their a slice of the revenue.

I just can't see how they can force a non UK company to pay UK corp tax.

Maybe they can......

[ASB]

I just can't see how they can force a non UK company to pay UK corp tax.

Ah, that is a different question, but they can certainly assess it. The law allows them to do so.

As to how they can force it, well that does require a certain degree of co-operation. Same as anything else under the rule of law.