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GoSeigen
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Shares in oversees private company

#212922

Postby GoSeigen » April 5th, 2019, 11:48 am

We are taking a controlling shareholding in a business oversees (non-EU). From a UK tax point of view, if we remain UK resident for tax purposes is it better to hold those foreign shares within a UK holding company structure of which we are 100% owners, or to hold the foreign shares directly as individuals? All operations will be conducted abroad; I contemplate that we will be able to control the timing of dividends paid by the overseas entity, but expect most of the return to come from a gain on sale rather than income, at least for the first few years Presumably the current tax regime is quite favourable to UK companies operating abroad?


I'm guessing the foreign (or local holding-company) shareholding cannot be held in a SIPP. Is there anything else sensible we should consider?

TIA.

GS

GoSeigen
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Re: Shares in oversees private company

#214554

Postby GoSeigen » April 12th, 2019, 8:43 am

GoSeigen wrote:We are taking a controlling shareholding in a business oversees (non-EU). From a UK tax point of view, if we remain UK resident for tax purposes is it better to hold those foreign shares within a UK holding company structure of which we are 100% owners, or to hold the foreign shares directly as individuals? All operations will be conducted abroad; I contemplate that we will be able to control the timing of dividends paid by the overseas entity, but expect most of the return to come from a gain on sale rather than income, at least for the first few years Presumably the current tax regime is quite favourable to UK companies operating abroad?


I'm guessing the foreign (or local holding-company) shareholding cannot be held in a SIPP. Is there anything else sensible we should consider?


Thank you Mods for moving this post from the Tax board. There were no comments about the above, but if anyone could give their thoughts I'd be grateful.

There is another issue we are working on. As stated, the property is abroad and is a commercial property, hospitality sector. We have contracted to purchase only the real estate property assets from the current owners. The sellers have a contract with a tenant who is operating the business. We have agreed a standard conveyance with vacant possession on date of transfer. In the past, the business has had some difficulties (lack of investment and poor management) and we are primarily interested in the property assets, rather than running the business but of course the two are linked. The sellers inform us that the tenant is in breach of his contract because he has failed to pay rent, and that they will evict him before transfer of title. They feel from discussions with the tenant that this can be done fairly amicably. Having only heard the seller side of the story, we obviously don't know the full underlying situation. In particular our own research shows that the tenant has been doing a reasonable job and has improved the property and business operation in the year or two he has been in charge. There is no indication that he is dishonest. We therefore are curious as to whether we could retain this tenant if his non-payment of rent has a legitimate explanation (e.g. some dispute with the owner). Of course this is impossible to judge without speaking to the tenant himself.

My question simply, to anyone experienced in these matters (BNC?) is: is it sensible to explore the possibility of retaining the tenant after purchase, and if so how to go about it? Should we attempt to do so with the cooperation of the seller as per our instinct? Or are there good reasons to cut out the seller and approach the tenant directly? We think we should go through the seller because: a) tenant could have agreed with the seller not to have such contacts, b) it may help the seller in settling his contract with the tenant c) all parties have an interest and/or duty in the future of the staff who work in the business.

Any tactical advice very much appreciated.


GS

dspp
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Re: Shares in oversees private company

#214606

Postby dspp » April 12th, 2019, 11:36 am

GoSeigen wrote:We are taking a controlling shareholding in a business oversees (non-EU). From a UK tax point of view, if we remain UK resident for tax purposes is it better to hold those foreign shares within a UK holding company structure of which we are 100% owners, or to hold the foreign shares directly as individuals? All operations will be conducted abroad; I contemplate that we will be able to control the timing of dividends paid by the overseas entity, but expect most of the return to come from a gain on sale rather than income, at least for the first few years Presumably the current tax regime is quite favourable to UK companies operating abroad?


I'm guessing the foreign (or local holding-company) shareholding cannot be held in a SIPP. Is there anything else sensible we should consider?

TIA.

GS


GS,

I have no words of wisdom on the matter of the tenant.

In respect of the tax I suggest you take advice, and the person I would go to for this sort of thing is https://casterbridgehardy.co.uk/ . I am just a very happy ex-client most willing to recommend him. Your location is irrelevant, and he is used to dealing with folk abroad.

regards, dspp


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