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Where Taxpayers and Advisers Meet

IOM Company Setup and Transfer

chocolatespatula
Posts:11
Joined:Tue Mar 02, 2021 10:00 pm
IOM Company Setup and Transfer

Postby chocolatespatula » Tue Mar 02, 2021 10:25 pm

I see alot of companies offering assistance with setting up companies in the IOM. The threshold looks fairly low - no residency requirement or minimum setup fee as far as I could see.

Is it possible to setup and organisation here to hold and least IP to UK based businesses, or run online organisations from here?

Lambs
Posts:1562
Joined:Wed Aug 06, 2008 3:15 pm

Re: IOM Company Setup and Transfer

Postby Lambs » Wed Mar 03, 2021 12:11 am

C,

You have asked several questions in different posts, in relation to business taxation. That is welcome, but I would caution you that if you are new to operating a business and want to attempt something ambitious/complex as regards tax arrangements, asking questions piecemeal is unlikely to get you the "right" answer.

For example, you have asked elsewhere about buying or leasing a van, but also about selling your own van to your own company. The answers to one may change quite a bit if you are asking about leasing from yourself, for example.

With regard to this particular question it is unclear whether you are primarily present and/or operating in mainland UK or the Isle of Man. If you are operating in mainland UK but thinking that incorporating your business in the IoM will somehow access more favourable tax treatment, then I should warn you that the place of incorporation of a business is only one aspect of its tax residence status. If you are operating a small company on / from the mainland then it will almost certainly be tax resident in mainland UK even if it has been incorporated elsewhere. While it MAY be possible to have a company that licences IP from overseas, there are a number of reasons as to why that may not be as beneficial as you might at first think.

If you are based in IoM and hope to run a mainland business from there, then that MAY be possible, but the amount of time you spend in mainland UK overseeing things may in turn be relevant - not necessarily in terms of just counting days, but in terms of decision-making and where that is taking place.

So, in short, feel free to ask away, but please note that any advisor here (and there are several here who do this for a living) would warn you, first and foremost, that once you have put together an overall plan in terms of what you want to do, please do make sure to get tailored advice specific to your circumstances from a suitably qualified professional.

With regards,

Lambs

chocolatespatula
Posts:11
Joined:Tue Mar 02, 2021 10:00 pm

Re: IOM Company Setup and Transfer

Postby chocolatespatula » Wed Mar 03, 2021 12:16 am

Thanks - obviously will seek a paid service once I have an idea of what I think I would like to do.

In regards to the particular question you say "While it MAY be possible to have a company that licences IP from overseas, there are a number of reasons as to why that may not be as beneficial as you might at first think." This is the crux of the question, are you able to elaborate?

Lambs
Posts:1562
Joined:Wed Aug 06, 2008 3:15 pm

Re: IOM Company Setup and Transfer

Postby Lambs » Wed Mar 03, 2021 12:45 am

Off the top of my head:

1 Transfer pricing
2 Offshore receipts in respect of the exploitation of Intangible Property
3 Basic "wholly and exclusively" test as may be applied to parties under common 'close' control whereby it could be argued that the payment is in effect a distribution to a participator, in terms of the excess.

I am not saying that any of these would definitely apply. But nor that the list is exhaustive, particularly as we have no information on how the IP got over to the IoM in the first place. I am saying that you should seek comfort on these points / the underlying issue before undertaking an "irretrievable" course of action.

Regards,

Lambs

AGoodman
Posts:1288
Joined:Fri May 16, 2014 3:47 pm

Re: IOM Company Setup and Transfer

Postby AGoodman » Wed Mar 03, 2021 3:19 pm

I'll add:

- basic company tax residence on the basis of management and control (ie. the company will still be resident in the UK for tax)
- the lovely new(ish) substance requirements - https://www.pwc.com/im/en/services/tax/substance-requirements-isle-of-man.html

You can't demonstrate substance for £5k per year so minimum fees will be the least of your concerns.

chocolatespatula
Posts:11
Joined:Tue Mar 02, 2021 10:00 pm

Re: IOM Company Setup and Transfer

Postby chocolatespatula » Thu Mar 04, 2021 12:53 am

thanks for the replies-will go do some reading

Lambs
Posts:1562
Joined:Wed Aug 06, 2008 3:15 pm

Re: IOM Company Setup and Transfer

Postby Lambs » Thu Mar 04, 2021 1:09 am

AG,

Thank you for the additional contribution. I was broadly aiming for place of effective management in my initial reply. The IoM substance requirement is a new one on me - I have little truck with the Manx. It's the 3 legs. Kind of puts me off.

VB,

Lambs

AGoodman
Posts:1288
Joined:Fri May 16, 2014 3:47 pm

Re: IOM Company Setup and Transfer

Postby AGoodman » Thu Mar 04, 2021 2:29 pm

I'm still demanding 50% of the fee...

maths
Posts:8287
Joined:Wed Aug 06, 2008 3:25 pm

Re: IOM Company Setup and Transfer

Postby maths » Thu Mar 04, 2021 9:46 pm

The IoM substance requirement is as with many offshore centres more for show to impress the so-called high tax country authorities.

Such was the case many years ago re offshore captive insurance companies who simply outsourced virtually everything.


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