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

[BlasterBates]

I have an MLI question - if a residence country judges I should pay my company's taxes there (which I haven't done as I paid them in the UK), will they convince HMRC to return its tax (so I can then pay it in my host country). Or am I charged twice?

No, they will simply say you were careless by declaring it in the wrong country and leave it up to you to claim it back. In the worst case the other country will simply argue that year is already closed. You need to be able to argue there was some legitimate reason why you incorrectly declared income.

[Lance]

INTM120070 - International Manual - HMRC internal manual - GOV.UK

DTAs always override domestic laws.

reading that article and interpreting it as "DTAs always override domestic laws" seems a bit naive.
Especially as your first post says you'll leave the UK LTD in the UK.

That link you posted refers to another that says

Company residence: residence under foreign law

A company which is resident in the UK under either the case law rule or the incorporation rule may also be resident in an overseas country for its tax purposes by reason of that country’s domestic law.

A company not resident in the UK will not necessarily be treated as resident by the country in which its central management and control is located.

Incorporation overseas is more likely to lead to tax residence in the country of incorporation but this will not necessarily be so, especially if the country is a tax haven.

Except where CTA09/S18 applies (see INTM120070), a company’s tax status overseas is not relevant to the determination of UK residence.

Where a company is both resident in the UK and resident in another country under its domestic law, it is called a dual resident. See the Company Taxation Manual at CTM34500 onwards for guidance on provisions affecting certain dual resident companies.

nowhere in there does it say that your UK company can avoid UK tax. You need a foreign company for that.

[zerosum]

Especially as your first post says you'll leave the UK LTD in the UK.

This is not possible. If I am the director and only shareholder, then by virtue of my tax residency moving overseas, the company's residence does also.

INTM120030 - International Manual - HMRC internal manual - GOV.UK (second test).

For me this is not about an exercise in paying relatively less corporation tax by virtue of being in a more tax-favourable country. It would be useful to hold on to the UKCo for the purpose of reassuring UK-based agents. That's it.

The issue is that there is a potential complication regarding exit tax and the cash left in the company. IMO this is questionable because I am not making money from company assets (like an email list, products, a well-known name, the nebulous concept of 'good will'). It seems very likely to me that someone on here will have gone through similar issues. Or maybe they just moved abroad and that was that, I suppose it would be hard for HMRC to twig unless you actually make a claim to get some CT back on the basis that you ought to pay less in your new country, hence why they make you ask for permission.

[WTFH]

It would be useful to hold on to the UKCo for the purpose of reassuring UK-based agents. That's it.

Totally different to what you've been talking about so far in this thread. It's irrelevant what the agents think, it's what the clients want.

If the client wants a UK resource, it's not about a UK Ltd, it's about a resource in the UK.
If the client wants an offshore resource, that's what they'll go for, and pay offshore rates for them.
If the client discovers that the onshore resource they are paying for is actually offshore, then you might find you're walked very quickly.

This is similar to the threads on here about people trying to use VPN to spoof their country and get round the client's rules.

[zerosum]

Totally different to what you've been talking about so far in this thread. It's irrelevant what the agents think, it's what the clients want.

If the client wants a UK resource, it's not about a UK Ltd, it's about a resource in the UK.
If the client wants an offshore resource, that's what they'll go for, and pay offshore rates for them.
If the client discovers that the onshore resource they are paying for is actually offshore, then you might find you're walked very quickly.

This is similar to the threads on here about people trying to use VPN to spoof their country and get round the client's rules.

Sure, I'm aware of this. Knowing this issue was impending, I have asked each and every client I've worked with since Brexit whether they would be willing to work with an EU-based company instead (pending examination of Brexit issues, so at least as a test of willingness, which is the best that can be hoped for). Each one said zero issues. It must be added here that I haven't done any public sector work. Agencies were a more mixed bag. However they made it clear that a UK-*incorporated* company would be sufficient.

With respect, your attitude here seems to be to try and catch me out on basics (holiday home, aha! gotcha you it doesn't matter about the agent, etc.), or suspect (without much evidence) that I'm trying to dodge tax or not disclose my actual position to HMRC or those that I work with. It's not that helpful.

[eek]

The 20 questions game we have to ask to get the details required to give you (and other posters) sensible questions equally isn't that helpful.

This is an issue where the devil is in the nuance and the detail.. If you want a sensible answer you need to either give us (or your accountant) all that detail.

And it may be that people will have no problem with using offshore resources (I don't) but you really would need to be clear about what you are doing unless you are very specialised / irreplaceable.

[zerosum]

The 20 questions game we have to ask to get the details required to give you (and other posters) sensible questions equally isn't that helpful.

I asked about whether anyone had experience with situations where exit tax might arise and how they handled that.

The only situation in which the '20 questions game' comes up is if someone doubts the premises of my question, which for me is an utter distraction and doesn't get anywhere closer to the goal.

Again, I've had reliable advice that it applies. I am sorry if some snowflakes on here think that's mistaken, and I'm sorry I wasn't able to dispel your doubts.

But again, does anyone have experience of dealing with this situation?

[WTFH]

With respect, .... It's not that helpful.

With respect, your failure to provide the honest information up front, but to choose to be deliberately obtuse, then for people to have to go round the houses - that is what is not helpful.

My experience with some of the sectors I work in, the client wants to know where each resource is based and in some cases have rules around where and how someone can connect on to their system and where their equipment may go to.

[zerosum]

My experience with some of the sectors I work in, the client wants to know where each resource is based and in some cases have rules around where and how someone can connect on to their system and where their equipment may go to.

I agree, it's a good point, and it's something I dealt with. But what the hell has it got to do with exit tax?

[zerosum]

This is an issue where the devil is in the nuance and the detail.. If you want a sensible answer you need to either give us (or your accountant) all that detail.

Perhaps it's easier if I say, for the sake of argument, I'm completely mistaken. Exit tax does not apply to my situation. The various specialists I spoke to were blowing smoke up my ***.

Nevertheless, I have a genuine intellectual interest and would love to hear from anyone that has gone through this? As we've established exit tax does not apply to me (!), my particulars won't matter.