Directors loans and offshore companies

[JoeReynolds]

Please accept my apologies in advance for what is inevitably going to be a necessarily long-winded question.....

i left the Uk in 2007/8. In 08/09 I was hired to perform professional services for an overseas company. I set up an offshore company with a Cypriot bank account at that time and traded through that company, paying myself a salary and paying local taxes on the salary. The profits of that company have not yet been distributed. 

In May of this year I returned to the UK and broke my residency. I am now overseas again and I am likely to be, though not yet certain, for the next tax year also. I have no desire to distribute the funds until a year in which I am certain of my uk Non-resident status.

My company now has a substantial (sterling) cash sum in the Cypriot bank account and I am concerned given the current world economy about having all my eggs in one basket in a bank which is a subsidiary of a Greek bank.

My question is: can I temporarily repatriate the cash to a personal account, in the form of a directors loan from the company, without the transfer being considered a dividend. I don't think UK directors loans rules apply as the company is not subject to UK corporation tax. Assuming that I have minuted that the transfer is a loan, repayable at a set date and with a specified interest rate is there any way that the transfer could be ruled a dividend? I will then deposit the cash in a personal account and account for any net interest earned in my tax returns until the loan is repaid.

Your thoughts would be greatly appreciated.

[maths]

1. On what basis did you leave the UK in 07/08?

2. How long were you back in the UK this 2011/12 tax year.

3. Did you return to UK between 07/08 and May 2011.

3. Purpose of return to UK May 2011.

4. Purpose of leaving UK in 2011.

[JoeReynolds]

Hi maths, thanks for taking the time to get some more details.

1. On what basis did you leave the UK in 07/08?

I left in Dec '07 to work overseas. I had just taken redundancy from my former employer and was given the opportunity to help a former colleague start a company in central America. This job continued until 'Aug '08 and wasn't a great success for me financially. However, it led to me being offered a lucrative role on a project in my normal line of work in the region so I started contracting independently in Aug '08 (and set up the structure mentioned previously).

2. How long were you back in the UK this 2011/12 tax year.

103 days in total in Uk. Returned In May, departed October (approximately 140 days between arrival and departure) but spent approximately 40 days in Jamaica, Ireland and Greece in between.

3. Did you return to UK between 07/08 and May 2011.

I left uk in Nov'07 and didn't return that tax year. 08/09 -was in Uk 41 days. 09/10 - did not return. 10/11 - 13 days in Uk.

3. Purpose of return to UK May 2011.

I returned to Uk in May as the current project I was working on came to an end and the next project wasn't due to commence until September (transpired it was delayed until October). I consider at an extended leave period as I continued to receive regular salary from my company during this time but was not actively working. I was however responding to emails relating to the former project and securing the next project - conservatively I would not want to have to argue that I wasn't working during this period for non-residency purposes

4. Purpose of leaving UK in 2011.

New project commenced in October. This project is likely to run until April 12. There is a high probability of it leading to another project that will keep me overseas in '12/13 although not yet secured.


Assuming the purpose of these questions is mainly for assessing residency I should probably add that I am single, have no dependents in Uk (father and sister reside in uk though) and own a flat in the UK which has been let continuously since Oct '07. While in UK this year I stayed at family member's homes and a girlfriend's. I paid tax overseas in '09/10 and '10/11. I think (though stand to be corrected) that my non-resident status from Nov'07 to April '11 is fairly straightforward and I broke this non-resident period in May '11.