I am just about to re-structure my UK business after starting up an offshore company. I need to check that the structures we want to put in place are legal etc.
I have a Ltd company, let's call it ABCD Ltd.
It trades as ABC. (correct - ABC).
Can the company sell the trading name ABC, and the goodwill associated with it, to an offshore company ... so that the offshore company receives the income, and pays ABCD Ltd a management charge to do the work?
No problem at all, yes.
You can see what we're trying to do ... avoid VAT by having the offshore company take all the income.
The offshore company pays £78,500 a year to ABCD in management fees. This is ABCD's only income - just below the VAT threshhold.
Then ABCD uses its come to pay all the bills, wages etc.
Is that legal / ethical?
OK, many thanks one other aspects, if you don't mind:
The offshore company is, say, JJJJ Ltd, registered in Gibraltar. Should it now become: JJJJ Ltd, Trading as ABCD?
And client contracts etc. Are they issued by JJJJ Ltd?
But who does that client have the contract with - the offshore company they pay, or the UK management company who delivers the service etc. Who do they sue / ask for their money back if there's a problem?
Oh. That's a revelation, many thanks!
So we can carry on as we are - same website, ABC.com, and use the same online contract, which is with ABCD Ltd. But the client doesn't need to know that JJJJ get the money?
wow. That's really helpful Keith. Presumably, the management agreement needs to be worded so that ABCD Ltd has legal liability towards the clients, or something? Is there a sample management agreement you can point us to?
OK that's fine. MANY thanks. So helpful. I may be back to you later when things get going.