Offshore companies

Offshore companies

Planning for international private clients often involves the use of non-UK resident companies, whether owned directly by individuals or through an offshore trust/company structure.

Offshore companies are mainly used for UK tax planning when the owner is non-resident or UK resident but not domiciled in the UK. For guidance on the taxation of non-resident individuals and UK resident non-domiciliaries, see the Non-resident individuals—overview and the Non-domiciliaries and the remittance basis—overview.

As a general rule, directly owned offshore companies holding investments and other assets cannot be used to shelter income and gains from UK tax if the owner is UK resident and domiciled. This is the effect of two codes, the transfer of assets code (TAA Code) directed at income and section 3 of Taxation of Chargeable Gains Act 1992 (TCGA 1992) at capital gains. See: UK resident individuals—taxation of income derived from assets held within offshore companies and UK resident individuals—taxation of capital gains derived from assets held within offshore companies below. See also Clarke's Offshore Tax Planning—Trusts and Companies:

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Chapter 6 Non—resident companies [6.1], and
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Chapter 15.1 Underlying

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Latest Private Client News

Private Client weekly highlights—20 February 2025

This week’s edition of Private Client highlights includes: (1) analysis of White v Williams, on the issue of who receives a disclaimed gift in a Will; (2) Bartram v Bartram, the first substantive judgment under the application under Guardianship (Missing Persons) Act 2017; (3) the City of London Law Society’s Financial Law Committee issues guidance on legal assignments under section 136 of the Law of Property Act 1925; (4) the GAAR Advisory Panel publishes its opinion on an arrangement which was designed to reduce the value of an estate for IHT and avoid IHT on a lifetime transfer; (5) Companies House publishes new Registrar's Rules on identity verification and ACSPs; (6) Keepers and Governors of the Possessions, Revenues and Goods of the Free Grammar School of John Lyon, Within the Town of Harrow-on-the Hill v His Majesty’s Attorney-General, which involved the analysis of a cy-près event and the power to alter the objects of a charity; (7) Palmer v Sans, an insolvency decision which considered whether property was held on a constructive trust; and (8) A Taxpayer v HMRC, in which the Court of Appeal provided welcome clarity on the exceptional circumstances exemption under the statutory residence test.

Court of Appeal upholds FTT exceptional circumstances exemption decision (A Taxpayer v The Commissioners for HMRC)

Private Client analysis: On 13 February 2025, the Court of Appeal handed down a judgment in A Taxpayer v The Commissioners for HMRC, an appeal against the Upper Tribunal's decision of 28 July 2023 which concerned the interpretation of the exceptional circumstances exemption (paragraph 22(4) of Schedule 45 Part 1 to the Finance Act 2013(‘para 22(4)’)) in the statutory residence test. The Court of Appeal allowed the appeal and restored the FTT decision, holding that the taxpayer could rely on the exceptional circumstances exemption and was not tax resident in the UK as a result in the relevant tax year. The Upper Tribunal's decision had significantly narrowed the extent to which circumstances might be treated as exceptional for the purposes of the exemption. By overturning it, the Court of Appeal has given taxpayers clarity on their position under the statutory residence test in the event that they are prevented from leaving the UK due to exceptional circumstances. Written by Carol Katz, partner, knowledge lawyer at Mishcon de Reya LLP.

Question of the week: Can a joint tenancy be severed after the death of one of the joint owners if it was intended to be severed in lifetime but the severance was not completed?

This Q&A considers how a post-death severance of an equitable joint tenancy is treated for tax and property law purposes.

Who receives a disclaimed gift in a Will? (White v Williams)

Private client analysis: The Chancery Division held that a disclaimed share of a residuary estate should be distributed among the remaining beneficiaries under the Will's provisions, rather than under the intestacy rules. The court interpreted 'failure' in the Will to include a disclaimer, even though the failure occurred after the testator's death. This decision underscores the critical importance of clear residuary clauses in Wills, particularly those addressing failure of gifts. Practical implications written by Timothy Clarke of Three Stone Chambers.