Offshore company or not 2?

[FunitureKing]

Hi All, I have read a lot of posts on the use of offshore companies but not one that fully answers what I am looking for. (If there is a post out there, sorry in advance).

Firstly I’ll tell you a bit about what I do. I make furniture in the UK that I sell across Europe, but I also buy in furniture from Italy and Belgium again that I resell both in the UK and abroad. I am looking into buying from China early in the new year too, and hopefully expanding my sales area (with the use of a website) to be on a global level.

Now this is the part that I am getting confused with, I was told by an old university friend who works in London (for a hedge fund & very clued up!) that I should set up an offshore company (e.g. in the Seychelles) and have a bank account in the Cyprus.......at this point I was getting a little lost. Essentially so that I can buy the furniture with the offshore firm and have the suppliers deliver direct to my customers.

This way the profit I make can will be by the offshore company and thus I would save a lot of money in tax, and therefore helping me buy the machines I need to be more competitive with the larger manufactures. This would also help with the current headaches I have with all the reporting and accounts I have to keep, as he mentioned that this is not always needed for offshore firms.

My issue was with my UK supplier and my UK customers, how can I use the offshore company here? Surely all the money I make buying and selling will be taxed/reported in the same way it is at the moment, so I don’t see the benefit here, or am I missing something.

If anyone could provide me with some advice it would be very much appreciated, or if you need more info please ask.
Many thanks

 

[The Business Anarchist]

For proper correct and legal advice, may I suggest that you look at www.molybank.com. Kind Regards

 

[John Mansley]

Setting up offshore companies is very risky if not done properly. You need exceptionally specialist advice if you choose to go down this road. This will probably cost you in the order of thousands of pounds.

 

[Zeno]

Setting up offshore companies is very risky if not done properly. You need exceptionally specialist advice if you choose to go down this road. This will probably cost you in the order of thousands of pounds.

And even then is going to be highly dodgy if the basic facts are that your company is currently owned & managed in the UK, using UK suppliers and selling to UK customers and will remain so after "moving offshore"

 

[David Griffiths]

I agree with Zeno. For tax purposes, the residence of a company is determined not where it is incorporated but where it is controlled, and these days that means the day to day management, not necessarily quarterly board meetings held in the offshore jurisdiction.

Sure there are plenty of legitimate offshore companies, but without exception all of the "brilliant" ideas brought to me by my clients, learned from "the bloke up the pub" have involved diversion of profits currently earned in the UK to this offshore company, and then drawing the money out in cash and spending it.

That overlooks the fact that the director/shareholder remains liable to UK tax on personal income, so even if the diversion is legitimate as soon as it's converted into income for the shareholders it comes back in to the UK tax net. Of course, that's not the plan, so it gets drawn in cash and either spent on holidays or smuggled back in to the UK.

That's fraud, plain and simple.

Let me be clear - not all offshore formations work that way and many are quite legitimate and properly run. Plenty aren't and if the Revenue find out, it will be painful and expensive.

 

[KINGSGATE]

Hi David,

Hypothetically speaking........if ATM cards were used to withdraw/redirect offshore monies into the UK, how would the Inland Revenue find out ?

I've been looking to set up an offshore account but wouldn't be running the company offshore, which obviously in a way nulllifies the legal reasoning and benefit of having an offshore account.

Any advice ?

PS: The main reason for opening an offshore account would be so that property could be bought in the UK and overseas anonymously.

Am I barking up the wrong tree here ?

 

[David Griffiths]

You're barking up the wrong tree if you expect advice on tax evasion.

 

[KINGSGATE]

Great Answer !!! Thanks Ever So Much !!!!!!! Really Helpful !!!

 

[Zeno]

Great Answer !!! Thanks Ever So Much !!!!!!! Really Helpful !!!

What did you expect? I am sure David has no wish to share a cell with you.