Anyone planning to be non resident in the future with a company offshore

Anyone planning to be non UK resident at some point in the future has a golden opportunity to use an offshore company to avoid UK tax.

A non resident company will be free of UK tax on:

  • Foreign income
  • Most capital gains

Often one of the main problems with an offshore company is considering how to extract the cash from the company. Unless you’re a non domiciliary claiming the remittance basis, an extraction of cash would be subject to UK tax.

However if you’re non resident you could simply extract the cash as a dividend.

Non residents receiving overseas dividends would be outside the scope of UK tax.

Therefore a strategy for anyone planning to be non resident in the future would be to retain income in the company and then extract as a non resident.

In order for this to be effective you’d also need to ensure:

  • The company was actually controlled from overseas
  • There was a sound commercial purposes for the company.

Another option could be to utilise non resident family or friends to own the shares in the offshore company. It would need to be ensured that they had genuine control and that they had the right to the income.

In this case if you carried out any activities in the UK you’d need to ensure these were under the supervision of the overseas directors to prevent there being any argument that you were a shadow director controlling the offshore company.