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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15332
Experience:  International tax
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We are a UK LTD company, doing business in the US. We need

Customer Question

We are a UK LTD company, doing business in the US. We need to know the UK tax implications of creating an LLC in the US and sending dividends from the US company back into the UK company.
Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello and thank you for your patience.
You most likely are aware of the recent problems that have been addressed by HMRC and the courts in relation to your question.
UK members of a US LLC are taxed on the profits of that LLC only when they are distributed to that member and relief from UK tax on the
basis of tax paid in the US by the LLC will only be available where the member is a UK company controlling 10% or more of the LLC.
A payment which is a repayment of share capital (including for
this purpose share premium – section 1025 CTA 2010) following such a
reduction is not a distribution and so will not be chargeable to income tax.
HMRC has already advised that a US LLC would be allowed under share capital certain circumstances an LLC may have ordinary share capital for the purposes of s.832 of the Income and Corporation Taxes Act 1988 (“ICTA”).
The way the share capital is handled is also important for purposes of taxable portions.
I think it may be best for you to read the following before you speak directly with your UK adviser:
http://www.hmrc.gov.uk/specialist/draft-amended-indiv-guidance.pdf


I sincerely hope this information is at least helpful with your very complicated subject.

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