Is this a viable (legal) scenario?

[fr33d0ml1fe]

Looking for experts opinion on this setup that i've thought about:

I currently run a UK LTD, as a UK resident.

I now have a lot more non UK clients, and a growing amount outside the EU too (internet based company/ legit)

If I was to for example register a "separate branded" offshore company in UAE right (on my British passport) and open a business account on a fin tech solution like bankera or transferwise that would all be completely legal correct? If my thinking is correct I could now advise all my NON UK clients that their invoices will come from UAE company, and ask them to pay into the IBAN from the fin tech providers above (for fast SEPA/ Swift processing)

So that leaves all the UK clients doing business with the UK LTD and non UK clients trading exclusively with the UAE entity. Profits of the UAE's company are now tax free? Right?

So that now reduces the UK companies tax liability in a legal way, by deferring NON UK clients to the UAE company for trading. Is that how it works?

So the final hurdle I can see would be how to utilise the UAE's companies profits at a later date

I would not want to hold UAE's companies money in the fintechs accounts (because they're unreliable to store funds/ can go bust at any time etc, and I think they're just better to be used to receive and transfer)

I think now I would want to move the UAE's profits weekly etc to a safe place. I would then I register a third company, a Nevis LLC and then swing the bulk of the funds to this Nevis LLC - who has a bank at say "cook islands" or similar private bank.

The UK company would just tick along servicing the UK clients keeping me employed as normal with my director salary and dividends as it currently is, and the UAE company would be sending its profits to the nevis LLC private bank where i would get a debit card and use it for funding my lifestyle.

Perhaps down the line I could then purchase assets under the Nevis LLC in the UK without any tax implications right? Typical assset protection scenario right? Under the Nevis LLC....

I believe as a UK resident i need to declare any foreign income, but if the UAE company is not actually giving me personally any income directly would I still need to declare it or would the CRSs of the banks give away my connection to the Nevis/ cook islands bank setup?

Sorry hope its not too complicated to understand.

Thanks for reading🙂

 

[CaptK]

There is no viable legal scenario. If your careful and continue to pay tax in the UK you could possibly get away with it.
The sooner you get to the UAE the better.

 

[fr33d0ml1fe]

Okay, thanks for the insight.

 

[Traveler]

Profits of the UAE's company are now tax free? Right?
Click to expand...

Not even close.

For as long as you remain a UK resident, there's virtually no viable way to significantly reduce your tax bill. It's a move or pay up scenario. It's completely irrelevant that your UAE firm would be serving your non-UK customers. Not only does it not matter as the work is still performed from within the UK, even if it wasn't, it still wouldn't matter as UK taxes its residents (both individuals and entities) on their worldwide income.

To understand where the structure you're proposing breaks down, Google "Controlled Foreign Corporation (CFC)" and "Permanent Establishement (PE)". Both would likely apply in the described scenario, making the UAE entity (as well as the Nevis entity) liable for corporate tax in the UK. Furthermore, any funds that you extract from these companies to "fund your lifestyle" would likely be considered either salary or dividend, both of which when received by a UK resident would trigger personal income tax.

The only purpose the structure you're describing would serve is that of a tax evasion vehicle, and a pretty poor one at that.

 

[Helioscope]

Traveler said:
The only purpose the structure you're describing would serve is that of a tax evasion vehicle, and a pretty poor one at that.
Click to expand...

I dare asking a dumb question: You consider it a poor scheme because CFC ruins the party, right?

 

[fr33d0ml1fe]

Okay thanks