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100% Owned Singapore Company Managed from the UK

British directors thinking of returning to the UK

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My husband and I are British (domiciled) and moved to Singapore (SG) over 10 years ago to set up a graphic design company incorporated in SG. It is a limited company. We operate this from our home in SG using a registered office set up to meet local statutory requirements. All of the clients are SG registered companies meaning that trading takes place within the confines of SG. 

We own 100% of the company (50/50 split) and do not have any employees, hence we are directors as well as shareholders.  

We're considering returning home for various personal reasons and do not want to sell or close the business as it provides our living (aside from a UK home belonging to my husband that we're renting out). Our approximate combined income is GBP60,000 p.a. after personal tax (company profits are virtually non-existent as we take it as income). The rental income is done via HMRC self-assessment and is excluded from the calculation above.

I have the following questions if we become UK residents whilst operating the company:

1. Can we take a 50% dividend (say GBP30k each) on the SG company's profits and pay UK dividend tax only without falling foul of HMRC? Dividends for SG companies are tax exempt but i am fully aware that they attract UK tax.

2. If the above is likely to cause issues or be unfeasible, would it be best to set up a UK company or go self-employed. I realise there are NI considerations, PAYE etc. Note: I don't think our state pension outlook is good as we haven't been contributing NICs for many years now. We were in another non-EU country before this for 5 years.

3. I am aware there's a DTA between SG and the UK but I don't know how this would work in practice if we have to go down Q2 route, i.e. would the SG tax authorities deduct corporation tax and the UK company offset this?

Just to be clear that our intention is to carry out daily operations from the UK where we would be physically present year round. Before anyone suggests closing the SG company and opening a new company in the UK for ease, the key issue is that it wouldn't be practicable. We need to operate using the SG company because we rely on providing clients with credit terms, local invoicing, banking, etc. 

I'd very much appreciate any advice because we want to make sure we're making the right decision financially amd want to realistically weigh up the pros and cons. Also, we want to make sure we're in compliance with HMRC and company law.

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09th Aug 2019 14:44

For the benefit of AW71, this is not the type of advice that I would be providing to clients for nothing.

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to Wilson Philips
09th Aug 2019 17:01

It would be ridiculous for anyone to believe that they could rely on comments received via an open-to-all forum to decide whether they were making the right decision financially, including correctly assessing all the pros and cons.

OP, for your own sake, please don't do that.

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to Tax Dragon
09th Aug 2019 17:08

Don't you normally add that it would be equally ridiculous for anyone to think they were giving appropriate advice based on a few paragraphs of background? I would agree with that addition.

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09th Aug 2019 16:29

Svg888 wrote:

Our approximate combined income is GBP60,000 p.a. after personal tax

That would be just about enough to get some paid for professional advice.

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09th Aug 2019 17:00

Definitely take some paid for advice. If you do nothing you will end up with a UK branch of SG co, with UK taxes due on that. You are performing your duties in the UK so that should be a UK payroll. The timing of dividends and your UK / SG personal residency might be worth planning.
Find someone who has knowledge of both systems as there could be some planning opportunities or it might be easier to just stop and start again

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11th Aug 2019 10:13

You need professional advice from the UK and also advice specific to running an SGCO as a foreign branch as this will have important implications for how the SGCO is taxed; you could even find that if not done correctly you will be massively out of pocket. Appoint an adviser with experience in both jurisdictions; there are some good ones out there as this is not an uncommon situation and the advice does not have to be prohibitively expensive. Not getting advice probably will be prohibitively expensive.

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By Svg888
12th Aug 2019 05:42

Thanks for all of your answers.

I'd just like to clarify that I am willing to pay for professional advice. My purpose of posting publicly was to find out if there was some broad consensus on the way forward from the community of experts before I sought professional advice. This would have served as a starting point to work from.

I wasn't keen on obtaining private professional advice and blindly basing our future decisions on it, esp. when the consequences could be dire if that advice is not correct.

I have been doing some further reading and I believe that our SG co would be classified as a CFC (Controlled Foreign Company) if we were UK resident. I understand there are exemptions for small profits so I really need an expert who can advise on this.

Again, I am prepared to pay for professional advice if anyone has any recommendations because i want to get this right before we take any decision to return to the UK.

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to Svg888
12th Aug 2019 06:20

Svg888 wrote:

I wasn't keen on obtaining private professional advice and blindly basing our future decisions on it, esp. when the consequences could be dire if that advice is not correct.

Private professional advice:
1. You know who's advising you (*).
2. Is interactive (the advisor will be able to establish relevant facts and details).
3. Give you rights under the contract between you and the advisor.
4. Puts a duty of care on the advisor under that contract.

Public forum advice:
1. You have no idea who's commenting.
2. Has too many voices for clarity of communication, making meaningful interaction difficult.
3. Gives you no protection.
4. Imposes no duty of care

Have a read through some other threads to see whether you'd base your decisions on answers like them.

(*) I appreciate that assessing the competence of a private advisor from afar could be difficult (Tim says there are some good ones, there are also some shockers). This is where I would suggest you should focus your research - making sure you find a private advisor you can trust.

Isn't that just common sense?

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