UK in International Tax Planning

Although the UK is depicted as a “high tax” jurisdiction with significant anti-avoidance legislation, it is surprising how many opportunities still exist for using UK entities as part of a tax-efficient onshore-offshore structure. These opportunities can be summarised as follows:

* Holding Company with participation exemption: for trading groups offering exemption from capital gains for substantial shareholdings.
* UK administrative company: as part of an international partnership or other arrangement whereby the UK company is used for invoicing or other administration duties, overall management and control vesting outside the UK.
* Limited Liability Partnerships (LLPs): popular with professional firms such as accountants, lawyers, surveyors, actuaries, etc.
* UK nominee company: acting as a commission agent for an offshore company where goods are sold or services are supplied internationally.
* Foreign resident UK company: which has its seat of management and control in a jurisdiction which has a suitable corporate residence tie-breaker clause in its tax treaty with the UK (e.g Cyprus).
* UK international holding companies: for receiving dividends with little or no foreign withholding tax or UK tax. The dividends can be passed on without any UK withholding tax.
* UK VAT Registration: for offshore companies and other entities in triangular trading structures involving shipment of goods between other EU countries. VAT refund claims for offshore entities incurring UK VAT can also be arranged.

Several other opportunities exist for tax-saving, deferral or effective cash flow management by using UK entities as part of an offshore structure. Other advantages also accrue in terms of loans and financing leverage and many other commercial benefits.