loan to offshore company and tax implications

[cgp12]

I'm looking at investing overseas (USA) and was considering setting up an offshore company for my investment in the US and use some of the returns which I would like to keep in the company to buy property abroad in the future. I want to do things properly when it comes down to Inland Revenue, but I want to minimise tax implications if possible as well as exposure to change in currencies which is why I want to set up offshore.

I was wondering whether it would be possible to make a personal loan to the offshore company (set up in st Vincent) that company invests in a company in the US, keep some of the returns in the company and pay interest on the loan to which I would pay tax in the UK?

I'm a UK resident and I have lived in the UK for 25 years, I was born and lived in Chile for 15 years prior. Thanks

[AmanSood]

There are going to be both US corporate tax and UK corporate/income tax implications. From a US perspective, operating a US company, you would have to declare any profits made on the investments/rental/gains on disposal etc and pay corporation tax in the US. Likewise from a UK perspective, as you will be UK resident (and presumably a director of the US company), there is a risk that the effective management of the US offshore company is in the UK and therefore the UK tax authorities would also look to tax the profits from your company. In addition, any dividend distributions etc from the US company will likely be taxable in the UK (as you have been in the UK for 25yrs and deemed domiciled in the UK). If you are going down this route to try and minimise your tax then it's unlikely to be effective and likely to result in more administration for you.

[maths]

Your domicile status is important.

However, you are already deemed UK domiciled for IHT purposes and effective 6 April 2017 will also be deemed UK domiciled for income tax and CGT purposes.

Anti-avoidance provisions will almost certainly apply to your proposals resulting in no UK tax saving.