Multiple passports and UK Tax residency

[sinos]

If someone has acquired multiple passports through investments in Caribbean, e.g. has a passport from both Grenada and Dominica and decided to stay in UK utilizing both the passports for 5 month each that means 10 months total. Will that person be considered to exercise Significant control on the offshore companies in a separate jurisdiction e.g. Nevis and be tax liable for those companies in UK. Assuming Board meetings to be held by nominee directors and the said person will have utility bills from passport countries.

Would like some input from @Martin Everson and @Tax Cow

 

[CreamSoda]

UK CT is charged on, generally speaking, companies incorporated in the UK or companies centrally managed and controlled in the UK. A nominee director, in which they rubber stamp all board decisions that are in reality made in the UK, would result in a UK CT charge. A professional director in another jurisdiction, may be advised and influenced by somebody in the UK, but may not be usurped in their independent decision making.

In terms of extracting those funds from the company, you should consult the statutory residency test (RDR3). Broadly speaking, it is taken in order of three automatic overseas tests, three automatic UK tests, and then a sufficient ties test.

Automatic overseas tests are:

1. You would fail because you spend more than 16 days in the UK.
2. You would fail because you spend more than 46 days in the UK.
3. You would fail because you spend more than 91 days in the UK.

For each of these tests, there are more components, but these are the steps you will definitely fail on.

The first automatic UK test would be met, as you spend more than 183 days in the UK. The fact that each stay of five months is on a different passport, would make no difference. You are still the same person.

As such, you would be liable to UK tax on worldwide income, save for any non-dom status which may apply (although not enough information is provided, I doubt this would be the case).

 

[Martin Everson]

CreamSoda is pretty much spot on.

OP you don't mention what status you would have while living in the UK. Will you be a non-UK citizen i.e no UK passport? In which case you can elect to have the non-dom status while living in UK. However even with that status you will run into problems if the centre of control and decision making is in UK. A nominee by definition is someone acting on your behalf so would not fulfill any definition of control of companies outside of the UK. Hence a taxable event would occur.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[CreamSoda]

Martin, even so, if OP was previously a UK citizen, and then revoked this upon becoming a dual citizen of Grenada and Dominica, it would likely be argued that he never intended for his domicile to be anywhere other than the UK, hence continuing to live in the UK. It's a much harder process than simply renouncing British citizenship.

 

[CaptK]

First question is why acquire 2 passports.
Are they in the same name
What was your original nationality

It seems very convoluted, there is something detrimental to your set up you have left out. Hypothetical won't help us give you a solid answer.

 

[Martin Everson]

CreamSoda said:
Martin, even so, if OP was previously a UK citizen, and then revoked this upon becoming a dual citizen of Grenada and Dominica, it would likely be argued that he never intended for his domicile to be anywhere other than the UK, hence continuing to live in the UK. It's a much harder process than simply renouncing British citizenship.
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No. British citizenship does not prevent you from being a UK non-domicile while living in UK. There are about 800 UK passport holders with resident non-domicile status in UK last time I checked reports. His situation needs to be examined first.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[CreamSoda]

Martin Everson said:
No. British citizenship does not prevent you from being a UK non-domicile while living in UK. There are about 800 UK passport holders with resident non-domicile status in UK last time I checked reports. His situation needs to be examined first.
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Agreed, but what I was trying to say was that even if he renounced his British citizenship (which we do not know if he had in the first place, given everything is lacking in detail and speaking in hypotheticals), this would not create an automatic non-dom status.

 

[Martin Everson]

CreamSoda said:
Agreed, but what I was trying to say was that even if he renounced his British citizenship (which we do not know if he had in the first place, given everything is lacking in detail and speaking in hypotheticals), this would not create an automatic non-dom status.
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Yes off course. But I am thinking he more likely had a sh1t passport like an Syrian, Sudan, Russian etc passport. I don't think anyone is crazy enough to keep a UK passport and come and live in UK as a non-dom under a different passport. He needs to explain more.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[sinos]

Martin Everson said:
CreamSoda is pretty much spot on.

OP you don't mention what status you would have while living in the UK. Will you be a non-UK citizen i.e no UK passport? In which case you can elect to have the non-dom status while living in UK. However even with that status you will run into problems if the centre of control and decision making is in UK. A nominee by definition is someone acting on your behalf so would not fulfill any definition of control of companies outside of the UK. Hence a taxable event would occur.
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I am currently UK non-dom . I am on the verge of getting a Grenadian Passport and was planning to add a second one. A Nevis structure is on the boards. Well I am undecided right now. I have taken legal advice on this and was told that the majority of the board of directors should be resident outside the UK, ideally in an offshore jurisdiction.

 

[CreamSoda]

sinos said:
I am currently UK non-dom . I am on the verge of getting a Grenadian Passport and was planning to add a second one. A Nevis structure is on the boards. Well I am undecided right now. I have taken legal advice on this and was told that the majority of the board of directors should be resident outside the UK, ideally in an offshore jurisdiction.
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Are you on the remittance basis?

The non-dom status would apply to foreign income, such as dividends received from an offshore managed company. But again, it is essential the company is managed and controlled offshore. There may be a small amount of witholding tax, depending on the jurisdiction chosen (see the relevant double tax treaty). Would the company have a permanent establishment in the UK (offices etc., including working from home)? What would be your input to the company? Solely a shareholder, or something more engaged meaning work in the UK?

 

[Martin Everson]

sinos said:
I have taken legal advice on this and was told that the majority of the board of directors should be resident outside the UK, ideally in an offshore jurisdiction.
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Yes if place of effective control/management, operation and decision making is outside the UK then no problem. But you can't stick a bunch of nominee directors to fulfill the duty of ensuring the majority of directors are outside the country for reasons I mentioned before about nominees.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[CreamSoda]

Martin Everson said:
Yes if place of effective control/management, operation and decision making is outside the UK then no problem. But you can't stick a bunch of nominee directors to fulfill the duty of ensuring the majority of directors are outside the country for reasons I mentioned before about nominees.
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And another point in which OP may fall foul; even if the majority of the board are offshore, and actually excercising control, if the UK resident director has veto powers etc, this could demonstrate onshore residency of the company.

 

[Martin Everson]

CreamSoda said:
Are you on the remittance basis?
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It can be elected each year when filing taxes so is not important as a non-domicile. You can switch between occurring basis and remittance basis quite easily.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[CreamSoda]

Martin Everson said:
It can be elected each year when filing taxes so is not important as a non-domicile. You can switch between occurring basis and remittance basis quite easily.
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Sure, but I was seeking any indication of a wider approach, as to whether he intends to use the remittance basis, or whether he is intending to rely on double tax treaties, which may preclude a number of jurisdictions for management of the company.

 

[sinos]

CreamSoda said:
Are you on the remittance basis?

The non-dom status would apply to foreign income, such as dividends received from an offshore managed company. But again, it is essential the company is managed and controlled offshore. There may be a small amount of witholding tax, depending on the jurisdiction chosen (see the relevant double tax treaty). Would the company have a permanent establishment in the UK (offices etc., including working from home)? What would be your input to the company? Solely a shareholder, or something more engaged meaning work in the UK?
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Remittance basis as of now.

There won't be any UK offices, I will remain as a passive majority shareholder and rest of advisors will also be offshore. Main question is "Do I have to disclose the offshore entity to HMRC?" If I don't will that be construted as Tax Avoidance? My current passport will not be used in any offshore company formation.

 

[CreamSoda]

Will trading profits be above £500k, or non-trading above £50k? If so, care needs to be taken with CFC rules.

 

[sinos]

CreamSoda said:
Will trading profits be above £500k, or non-trading above £50k? If so, care needs to be taken with CFC rules.
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I just chukled a little, yeah you may have got me there. Well, trading profits will be above £500K, for sure. I deal mostly in crypto.

 

[CaptK]

Then your problems have become even deeper.
This one needs serious money thrown at it.
Look to actually employ proper people with serious knowledge. So if any questions are asked then they can answer them.
You can partner with someone in the crypto space in another country who has offices and staff. Piggy back on them and cut them a retainer for doing so.


Option 2 start looking for a new country to live in.
Malta is 5% after rebate on paper.
UAE tax free all the way.

 

[Martin Everson]

I would personally just avoid the UK unless there is a compelling reason for wanting to live there as a non-dom. I would keep it simple and move to a tax free country.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Konstanz]

If you can affort citizenship programs you might be able to afford Monaco residence. Monaco resident income tax is 0% , no CFC and no PE.
Medittearean. Enjoy the nice nature and weather.
These citizenship programs don't help you much if you don't live in these Caribbean countries. I understand you want to live in Europe.
So, as I said Monaco is perfect, because of convinient flights to London from Nice airport and other destinations.
Dubai residence + life in Spain or other south europe countries (without registering there). This is a more risky way, but cheaper.