Setting up a Limited company in Channel Islands

[CIS121]

Hi,

Lots of advantage of this for a UK mainland based tax payer, any disadvantages apart from separate accounting and compliance rules?

I don't understand why more companies in the UK don't do so...

[TownIdiot]

What do you see as the advantages?

There is a major reason why UK tax payers don't do it...

[CIS121]

TownIdiot said:

What do you see as the advantages?

There is a major reason why UK tax payers don't do it...

For me the main attraction is 0% corporation tax

I already have companies in Bulgaria which has 10%, it saves quite a bit despite the hassle

[Simpo Two]

Is this the sort of thing that Reeves might knacker at the next budget? I remember Brown changing something to savings accounts that had me moving out 20+ years ago.

[CIS121]

Simpo Two said:

Is this the sort of thing that Reeves might knacker at the next budget? I remember Brown changing something to savings accounts that had me moving out 20+ years ago.

I don't think she can, she doesn't have jurisdiction over Jersey...

[Blue62]

CIS121 said:

Hi,

Lots of advantage of this for a UK mainland based tax payer, any disadvantages apart from separate accounting and compliance rules?

I don't understand why more companies in the UK don't do so...

You’ll need a smart accountant and legal team and be prepared for some ‘attention’ from HMRC. In the end you have to weigh up the hassle, but I’ve no idea what line you’re in so any input here is pretty pointless. My advice would be to talk to your accountant.

[TownIdiot]

CIS121 said:

For me the main attraction is 0% corporation tax

I already have companies in Bulgaria which has 10%, it saves quite a bit despite the hassle

Are you declaring your ownership and control of these companies?

If you are trading abroad then fair enough if not....

[Hill92]

Where will the central management and control of the proposed be exercised from?

Will the company have a fixed place of business in the United Kingdom through which the business of the company is wholly or partly carried on?

Will there be an agent acting on behalf of the company has and habitually exercises authority to do business on behalf of the company in the United Kingdom?

Will the company have any of the following types of profit?
- Trading profits attributable to a trade of dealing in or developing UK land.
- Gains that arise on the direct, and certain indirect, disposals of UK immovable property.
- Profits of a UK property rental business.

The terms you need to look for are corporate residence, tax domicile and permanent establishment/branch/agency.

You would also need to evaluate UK registration and filing requirements e.g. Register of Overseas Entities.

There are good reasons it's not more common.

[Puzzles]

Not a question that can be answered here, but if it were that easy everyone would do it. PE.

[MustangGT]

CIS121 said:

Simpo Two said:

Is this the sort of thing that Reeves might knacker at the next budget? I remember Brown changing something to savings accounts that had me moving out 20+ years ago.

I don't think she can, she doesn't have jurisdiction over Jersey...

She does not need jurisdiction over Jersey, simply make it illegal to operate if not based in mainland GB.

[CIS121]

Hill92 said:

Where will the central management and control of the proposed be exercised from?

Will the company have a fixed place of business in the United Kingdom through which the business of the company is wholly or partly carried on?

Will there be an agent acting on behalf of the company has and habitually exercises authority to do business on behalf of the company in the United Kingdom?

Will the company have any of the following types of profit?
- Trading profits attributable to a trade of dealing in or developing UK land.
- Gains that arise on the direct, and certain indirect, disposals of UK immovable property.
- Profits of a UK property rental business.

The terms you need to look for are corporate residence, tax domicile and permanent establishment/branch/agency.

You would also need to evaluate UK registration and filing requirements e.g. Register of Overseas Entities.

There are good reasons it's not more common.

Thank you, I think it looks like our way forward, but I'll have a look into these then set up a chat with the accountants
Thanks again, very helpful!

[Eric Mc]

On what grounds can you justify setting up a limited company in a foreign territory i.e. a territory in which your trade does not operate in?

[Lefty]

I’d look into the IoM as an option.

[Eric Mc]

Setting up a company overseas JUST to avoid tax holds no water with HMRC. You must be able to show sound BUSINESS reasons why you think you can do this.

[DaveA8]

This is all big ticket stuff and if the people who fantasise about these things understood the detail they wouldn't need to post here.
Decades ago I found a particular component that if I tooled up for would be possibly millions but a company in Spain had, I contacted them and was told the export contract or licence was held by an English man living in Spain. I eventually agree a deal and agree a licence fee, the company was Jersey based and because Spain applied a with holding tax, they'd invoice me and I'd pay as no with holding from UK.
This worked well for a good number of years and we had a local compliance visit and the usual grumbles about BIK etc and then and I'll never know why but someone allowed the local compliance person to this agreement.
We ended up having an enquiry from the Complex Business Unit and the inspector got it into his head that I was really Mr X from Spain and had been illegally ferreting money away and along with fines etc, he'd hit a jackpot.
The guy in Spain wasn't interested and ignored everything related to this and that made the inspector even more sure, he was threatening as a starter disallowing all CT deductions and fines etc, it just became all consuming.
In the end I had a report done at extreme cost by a very well recognised firm of lawyers who drilled down and were happy to confirm that it was an arms length commercial contract.
Response from HMRC inspector one line saying matter closed, he was without doubt this most horrible, nylon wearing, still living with mother incel imaginable but he near broke me because it's just constant drip, drip, drip.
So unless you have an army of lawyers who will do the day to day be prepared to be bored and argued pointlessly to financial death

[bristolbaron]

CIS121 said:

Hi,

Lots of advantage of this for a UK mainland based tax payer, any disadvantages apart from separate accounting and compliance rules?

I don't understand why more companies in the UK don't do so...

Yeah what mugs! May as well do some cash in hand and money laundering whilst we’re at it!

From my position it’s fairly simple, I have governments contracts which we’d fall without anyway so it wouldn’t be possible for us to do but more importantly I know if there’s a knock on the door I’m good. Of course I’d like to pay less tax, but I’m quite alright with what I’m left with and have a stress free life - I don’t understand why I’d want to change that.