Offshore Companies

[1]

Anyone got any experience of setting one up?

I need to start a company outside the EU to import things from India. The reasons are complicated, but I am looking for a country which has similar corporate laws to the UK and are easy to deal with. It would also need to have some credibility in order that people would be conformable dealing with us. Although the tax advantages are not my main motivation it is another element for us to consider.

I am currently swaying toward Jersey or the Isle of Man but am looking for any advice people can offer. Does anyone have any experience of trading through these countries?

Also how easy is it to set up a bank account and what are the VAT implications (Do we have to charge it and can we claim it back) if we are selling to customers within the UK?

Edited by 1 on Tuesday 26th August 17:10

[Eric Mc]

If the company is GENUINELY trading from the Channel Islands or the Isle of Man then it would not normally have to charge VAT on its sales (being based outside the EU). However, depending on the value of individual items being sold, VAT at the Point of Entry into the EU countries where your customers are based might be chargeable.
This is how play.com operates.

If the company is just REGISTERED outside the UK, this does not mean that it can automatically avail of any tax breaks available to non-UK companies.

[1]

Eric Mc said:

If the company is GENUINELY trading from the Channel Islands or the Isle of Man then it would not normally have to charge VAT on its sales (being based outside the EU). However, depending on the value of individual items being sold, VAT at the Point of Entry into the EU countries where your customers are based might be chargeable.
This is how play.com operates.

If the company is just REGISTERED outside the UK, this does not mean that it can automatically avail of any tax breaks available to non-UK companies.

Thanks Eric Mc.

The items will be sold for around £15 via the web and our intention is to run an office here in the UK, importing the goods directly to the UK from outside the EU and do all of this through a company registered outside of the EU.

Based on that are you able to give me any more info on the VAT position. Also if we have to charge VAT does that mean we can also claim vat back?

You also mention that if the company is based outside UK then it doesn't automatically avail tax breaks, please could you give me more info. In what instance would UK tax be applicable?

[Eric Mc]

The interaction of overseas based companies with UK trading is EXTREMELY complicated and and an area where specialist taxation advice would be strongly advised.

Merely having a company's registered office in an overseas country does not, in itself, enable the company to operate outside of UK taxation. If that was so, all limited companies in the UK would be doing it.

Even if a company does set up (say) in the Channel Islands, if it is operated from and managed predominantley in the UK, it will be looked on as a UK company and its profits will be subject to UK taxes. Also, if it is running its business chiefly in the UK and is generating sales income over the UK VAT threshold, it must register for VAT.

Obviously, if it is VAT registered, it will be able to reclaim business related VAT on its costs.

[ginettag27]

What about Tescos Jersey and Amazon Jersey then??

[The Moose]

im guessing that the reason you want to do this is because the value of your item is low and therefore avoids the taxs from the chanel islands???

The Moose

[1]

The Moose said:

im guessing that the reason you want to do this is because the value of your item is low and therefore avoids the taxs from the chanel islands???

The Moose

The reason has nothing to do with the taxation, It is to do with the regulations for the product we are intending to sell, they are very different for a company based outside the EU. It will make things much easier for us if we are not registered within the EU.

In fact I would prefer to simply run it as a UK company in terms of the accounts and taxation. From what Eric MC has said that is pretty much the case.

[Eric Mc]

The Moose said:

im guessing that the reason you want to do this is because the value of your item is low and therefore avoids the taxs from the chanel islands???

The Moose

Larger corporations have the ability to set up all sorts of trading arrangements for all sorts of purposes - and pay their accountants and consultants millions for the privilege.

Small owner/managed limited companies don't really have these options simply because they can be very complex and expensive to administer correctly.

[CR0X]

Eric, a similar question if I may.

We are importing goods from Egpyt and want to ship them direct to Ireland (Eire), but they are in demurrage awaiting someone to pay Irish VAT. Obviously we don't we didn't factor that in, as we can't charge VAT being a UK registered company.

Any way around it, other than getting a customer to pay for the VAT themselves, and then claim it back?

Would, as above, be a viable option, particuarly when we are looking at bringing in 200m of these things (reasonable value between £20 and £60 per 1000) a year, both from India and Egypt.

[Eric Mc]

CR0X said:

Eric, a similar question if I may.

We are importing goods from Egpyt and want to ship them direct to Ireland (Eire), but they are in demurrage awaiting someone to pay Irish VAT. Obviously we don't we didn't factor that in, as we can't charge VAT being a UK registered company.

Any way around it, other than getting a customer to pay for the VAT themselves, and then claim it back?

Would, as above, be a viable option, particuarly when we are looking at bringing in 200m of these things (reasonable value between £20 and £60 per 1000) a year, both from India and Egypt.

Is this an Irish VAT question or a UK VAT question?

[CR0X]

Irish VAT question as the goods will be imported into Ireland.

We have thought about three solutions:

take the goods in via Belfast, put the VAT on our deferment account
take the goods into Port in the UK, then straight out again, again using our deferment account.
use a haulier who has a deferment account.

All incur extra cost, which really doesn't help, so any solutions around it, both in the short and long term would be very beneficial.

[Eric Mc]

You need to talk to a Republic of Ireland VAT specialist - or else the VAT section of the Irish Revenue Commissioners.

I last worked in the Irish Republic in 1985 so my knowledge of such matters is very out of date now.

Edited by Eric Mc on Wednesday 27th August 11:05

[JOETHETOE]

I have recently looked into setting up an offshore trust, all very very complicated. If I were you I would spend some money and go to a specialist, the field changes quite regularly so what you hear on a forum etc could well be out of date and completely inaccurate. I used a company called Montpelier and they were very helpful.