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bigduckontax
bigduckontax, Accountant
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What systematic steps and key

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What systematic steps and key activities/agreements/contracts need to be in place to ensure an offshore company is not operating within the "transfer of assets abroad" anti avoidance uk tax legislation and what approach to paperwork and the paper trail is needed to achieve this?I am forming an offshore company which is being fully managed and controlled overseas by a non UK domicile shareholder and non UK domiciled directors with board meetings and international contracts all non UK based. I feel that we satisfy the HMRC conditions for not being "managed or controlled" in the UK however, the anti avoidance legislation on "transfer of assets abroad" vaguely includes intangible assets such as intellectual property. My enormous concern is that it is difficult at the best of times to determine the origin of intellectual property which makes it an easy target to be claimed to be "UK based" which would then put us under scrutiny for UK tax even though the bulk of activities are not linked to me and are managed abroad.
Submitted: 7 months ago.
Category: Tax
Expert:  bigduckontax replied 7 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. This is a complex tax subject. Here is a summary from Smith and Williamson, Chartered Accountants: 'So is it really worth moving IP abroad? Before you rush out and start relocating your IP, three key considerations must be taken into account.The UK, as with many locations, imposes an exit tax for any transfer of valuable assets held by a company, based on the market value of the asset at the time of the transfer. If the development or marketing of your IP is at an advanced stage, this value, and therefore tax charge, may be substantial. Exit charges generally are being challenged by the EU but remain, at this time.If your group is (and remains) UK controlled, the UK's controlled foreign company rules may apply to tax income of the (now non-UK) royalty income as it arises, so any offshore benefit could be clawed back unless exceptions apply.If the key decision maker(s) remain in the UK then any foreign IP company may well be managed and controlled and so tax resident in the UK. This will often be the case for a single inventor.In addition, the taxation of IP in the UK is being considered in current consultations concerning corporate tax reform, looking at, for example, reforming controlled foreign company rules and taxation of foreign branch profits. The Chancellor has stated his intention to create the most competitive tax regime in Europe so the UK regime may improve over the next few years. Despite this, in the long term, and in the right circumstances, there may be benefits to transferring IP, even taking into account exit charges. However, there are many factors to take into account in making that decision and it is one that shouldn't be ta***** *****ghtly. As with most aspects of tax, it is much easier to develop or acquire your IP in the 'right' place from the outset, rather than think about it down the line when it may be much more difficult and costly to move it.' I suggest that you read the full ramifications in the article here: http://www.smith.williamson.co.uk/entrepreneurs/resource-centre/article/3993-intellectual-property-a-reason-to-quit-the-uk I do hope that my reply has been of assistance.
Customer: replied 7 months ago.
Hi Keith,
Thank you for your response which I have read carefully. In fact I had already read the article in question along with dozens of other articles on the topic all of which confirm the same information - the ramifications of the "transfer of assets abroad" legislation but my question was;"What systematic steps and key activities/agreements/contracts need to be in place to ensure an offshore company is not operating within the "transfer of assets abroad" anti avoidance uk tax legislation and what approach to paperwork and the paper trail is needed to achieve this?"I don't feel your answer provides me any further information than I already knew from my own research. I am well aware of the implications of setting up and operating an offshore entity with relation to teh anti avoidance legislation but my question was what steps can I take in order my company is NOT operating within that legislation - I was not enquiring as to the ramifications of operating within the legislation.
Expert:  bigduckontax replied 7 months ago.
I suggest that it would be more appropriate to engage an accountant who practices in this area. I will opt out of this question.
Expert:  bigduckontax replied 7 months ago.
Post to clear my question list.
Customer: replied 7 months ago.
how do we reverse this process?
Expert:  bigduckontax replied 7 months ago.
If you would like your fee refunded you must approch Just Answer Administration. Otherwise another expert may pick up your question.

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