Using off shore company to buy a foreign property

[SClondon]

I'm a UK resident and tax payer and want to buy a property in Dubai (possibly to rent out but not necessarily). I'd like to protect any gains (income or capital) from UK tax, as I may emigrate in the future.

I've heard that setting up an off shore company (in the British Virgin Islands) and off shore bank accounts (Jersey) could help. I would then own the shares of the company (but obviously not pay myself an income or dividend whilst in the UK).

I would invest my capital (no loans) into the company and it would buy and sell the Dubai property (hence I don't direclty own the property. This seems too easy. Is the advice I've got flawed? Is there anything special about the company formation that could blow the plan?

Any help would be appreciated.

[johnfkavanagh]

You do not mention whether you are domiciled in the UK which is a crucial factor.

If you are domiciled in the UK, the structure you mention will not shelter income or capital gains while you remain resident in the UK. The mere fact that you do not intend to pay a dividend or otherwise take any income from the company while UK resident wuld not of itself enable you to avoid UK tax on the income. Neither would the fact that the company does not bring the income into the UK.

There are several relatively complex issues which need to be addressed and you will certainly need professional advice. I specialise in this area and I would be happy to help but more information will be necesary.

John Kavanagh CTA
UK Tax Consulting Limited
Chartered Tax Advisers
www.uktaxconsulting.com
mail@uktaxconsulting.com

[Taxbar]

The critical thing here is that regardless of the Domicile issue, to achieve a legal solution is going to be costly and unless you are talking about a substantial property, most potential solutions will be too costly for a possible tax deferral in the future.

Also,beware of Offshore operators offering cheap off-the-shelf answers! The Case of
Dimpsey v Allen demonstrates that an offshore company run incorrectly can lead not just to tax problems, but to a prison sentence!


Daniel M Feingold
Barrister-at-law (NP)
Strategic Tax Planning
International & UK Tax Consultants
Treen House
72 Park Road,
Prestwich,Manchester M25 OFA
England. UK
E-mail: info@stratax.co.uk