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Please see our full Signpost document regarding Family Investment Companies for more information on these vehicles.
Many clients were looking at using non-UK FICs, particularly ahead of the UK’s 2019 General Election and the perceived threat to assets and wealth posed by a potential Labour government.
Although this threat has now subsided, wealthy families might seek to protect their assets by holding them through non-UK FICs.
One must also take care around the drawbacks and particularly from tax anti-avoidance rules which are prevalent with this type of planning…
Privacy & Non UK Family Investment Companies
Many clients will choose to avoid, or at least explore avoiding, the requirement to file at Companies House… This will be done for legitimate privacy reasons.
A non-UK FIC may mean that one is protected from the ability of ordinary members of the public from being able to view the company’s details during their lunch breaks.
One will need to choose jurisdiction carefully here.
Further, there may be other methods of protecting one’s privacy and all options should be explored.
If one is looking to have a non-UK resident company then the directors will need to exercise management and control overseas. This will mean that the family will need to be comfortable with allowing control to pass to professionals based overseas.
This might simply be unpalatable.
Of course, the option of privacy might be provided through a company that has been simply registered offshore with the directors resident in the UK.
Even where one has managed to achieve a position where management and control overseas such that the Company is non-UK resident, one needs to be very mindful of personal tax anti-avoidance provisions.
Income Tax & Non UK FICs
The Transfer of Assets Abroad rules will be highly relevant.
Where there are UK shareholders and non-UK income within the FIC that otherwise would not be subject to UK tax then HMRC effectively has the ability to look through the Company for tax purposes.
This means that the stakeholder will be subject to income tax on the profit personally.
There are two defences against these provisions:
As such, where one is using a non-UK company be aware of these anti-avoidance rules and choose the location of the FIC wisely.
CGT & Non UK FICs
Similarly, where a non-UK company sells assets which would otherwise be outside of UK CGT and there are UK based shareholders then one needs to consider anti-avoidance rules which can attribute some or all of the gain to that UK based shareholder.
Other anti-avoidance rules may also be relevant.
If you have any queries around using a non-UK Family Investment Company
then please do get in touch.
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Using a non-UK Family Investment Company was last updated on 16 December 2019