I am a UK-resident currently setting up an Overseas Company in S.E. Asia.
I intend to fund the Overseas Company via my UK Company, as this was a requirement of my funder (they would only transact with a UK Company, but they are fully aware that all profits will be generated Overseas). I am therefore wondering what will be the best way to do this from a UK Tax perspective?
I own 100% of the UK Company (which only exists to fund this transaction, i.e. there is no other trading activity) and I own 24.5% of the Overseas Company.
The 'easiest' way would be for the UK Company to be listed as the owner of my shares in the Overseas Company, but I need the shares to be in my name in order to obtain a Working Visa in the Country.
My proposal was to loan money from my UK Company to the Overseas Company and post a "Notice of Security" with the relevant overseas Authorities, essentially giving me a piece of paper to prove that the UK Company has security over my Overseas Shareholding. The loan(s) would be at 0%, and transacted in GBP (to avoid currency fluctuations on the UK side).
As part of the Loan/Security Notice, the UK company would receive all Dividends due to me from the Overseas Company until such point as the loans are re-paid. In the meantime, I will pay all of Dividends to myself through the UK Company. The UK has a Tax Agreement with the Overseas Country, so there shouldn't be any issues there.
This all seems simple and logical enough (to me at least), but my concern is that I may inadvertently expose myself to UK Corporation Tax liabilities through the Loan mechanism? I'm also not sure whether I would need to post a charge with Companies House (to register the Security at both ends), or if that only applies to debts rather than liabilities?
All thoughts/advice/further questions welcome!
For context, we're talking about a £300k loan, and the majority of profits will be re-invested in further Assets, so likely Dividends of £0-50k per annum. Also, the Working Visa is a 'nice to have', so if the best solution is to put the shares in the UK Company's name then that is also fine.
Many thanks in advance!