All the comment in the press recently concerning the Liechtenstein Disclosure Facility (“LDF”) and the “ground-breaking” (as AccountancyAge.com have called it) agreement that HMRC have just reached with the Swiss authorities (more on that in a later post) have set us all thinking.
Whilst everyone tends to focus on an effective tax rate of 52% tax, which lets be honest – is high – does the UK perhaps offer an entrepreneur a more tax efficient regime (with the correct structuring) than an initial cursory flick through the legislation suggests?
Most UK holding company shareholdings in trading companies (UK or foreign) will be exempt by virtue of the substantial shareholdings exemption, which effectively means trading activities could be sold off tax free.
Coupled with that and a maximum individual capital gains tax entitlement of £10m at 10% things are starting to look attractive. We also have an extensive network of double tax agreements and a membership of the European Union.
Whilst the Government have recently withdrawn their plans to introduce some fairly radical changes to the agreements, various countries such as Cyprus, Malta, Luxembourg and even Denmark offer some interesting reliefs for those who are looking to structure their affairs in a tax efficient manner.
With care, withholding taxes on royalty payments can be reduced and interest payments to non residents can be totally eliminated.
With effect from next April 2012 it should also be possible for foreign domiciliaries to bring their foreign income or gains into the UK in order to invest in a UK business without triggering a taxable remittance (although for those that cannot wait, this can actually be done now with care).
The reality therefore is that the UK does offer some attractive tax efficient structuring opportunities for both UK and foreign domiciliaries.