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Tax dividend income for non-resident LLP partner

Dividend income allocated to non-resident partner be taxed or be treated as disregarded?

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Hello all,

This is my first post on AccountingWeb and I would like to ask you a question.

I would like to set-up an UK LLP as a holding company. The LLP will have two partners: myself (UK resident) and a non-resident company (BVI). This LLP will fully own three or four UK LTD companies from which will receive dividends.

The partnership will not actually conduct any trade but will just receive dividends from the LTDs.

- Will the dividend income allocated to the non resident partner (BVI company) be taxed or will it be treated as disregarded income?

I understand that dividend income can generally be treated as disregarded income for non-residents however Guidance HS300 Non-residents and investment income (2017) says: "Disregarded income doesn't include a share of partnership investment income. "

- Will this mean that the non-resident partner will have to pay UK Tax on their share of the dividend income?

- Would it be better in this case to set-up an UK LTD rather than a LLP?

Thank you

Amedeo

Replies (12)

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By Matrix
25th Jul 2020 14:58

I don’t know what you are trying to achieve but there seem to be a lot of different entities here which may or may not be required. I would get bespoke advice, in any case I would not rely on an internet forum for the initial structuring of a new business.

Thanks (1)
Replying to Matrix:
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By amed
25th Jul 2020 17:05

Thank you.

I didn't ask for a comment or opinion.

I asked for a precise technical information.

- Will the dividend income allocated to a non-resident partner of a pure holding LLP be taxed or will it be treated as disregarded income?

If you don't know, don't type.

Amedeo

Thanks (0)
Replying to amed:
Maddy Christopher
By Maddy Christopher
28th Jul 2020 10:33

Dear amed,

I would advise not to ask for free advice from professionals for what would be a paid-for service. This is not what the forum is for.

Please do not respond to users with rudeness when asking for help, this behaviour is offensive to those who are willing to take the time to answer your question.
It is also an unwise choice of action for someone looking for free accounting advice from professionals.

Regards,

Maddy

Thanks (2)
Replying to Maddy Christopher:
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By Paul Crowley
28th Jul 2020 11:49

Much appreciated

Thanks (0)
Replying to Maddy Christopher:
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By Tax Dragon
28th Jul 2020 12:01

That's all true, Maddy, but let me point out the funny side... the OP claims to be doing international tax panning apparently based on nothing more than "Guidance HS300 Non-residents and investment income (2017)" [I just love the bracketed bit]. You're already giggling, right? (Well, I was, when I read it. As you well know, HS300 (2017) gives loads of detail on all cross-border tax issues, including the transfer of assets abroad rules... who knows whether those rules are relevant? Not me, from the info provided. Who cares? Clearly not the OP.)

The OP's next post turned the giggles into guffaws. I know a lot of people try to hide ignorance behind rudeness, but this attempt was just hilarious. Disgraceful, sure. Reprehensible, obviously. But... well, I've enjoyed the reread. Because it's also unbelievable. A joke poster, surely.

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Replying to Tax Dragon:
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By Tax Dragon
28th Jul 2020 12:09

Tax Dragon wrote:

HS300 (2017) gives loads of detail on all cross-border tax issues...

Another joke alert: this is sarcasm.

Thanks (0)
Replying to Matrix:
Psycho
By Wilson Philips
25th Jul 2020 17:08

Agreed. I would suggest that if a BVI company is involved the OP can easily afford to pay for the professional advice to get this right.

Thanks (0)
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By Paul Crowley
25th Jul 2020 19:50

amed wrote:

Hello all,

This is my first post on AccountingWeb and I would like to ask you a question.

I would like to set-up an UK LLP as a holding company. The LLP will have two partners: myself (UK resident) and a non-resident company (BVI). This LLP will fully own three or four UK LTD companies from which will receive dividends.

The partnership will not actually conduct any trade but will just receive dividends from the LTDs.

- Will the dividend income allocated to the non resident partner (BVI company) be taxed or will it be treated as disregarded income?

I understand that dividend income can generally be treated as disregarded income for non-residents however Guidance HS300 Non-residents and investment income (2017) says: "Disregarded income doesn't include a share of partnership investment income. "

- Will this mean that the non-resident partner will have to pay UK Tax on their share of the dividend income?

- Would it be better in this case to set-up an UK LTD rather than a LLP?

Thank you

Amedeo

Thanks (0)
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By Sarah Z
25th Jul 2020 20:11

Go and pay for professional advice. This is a forum for accountants. You were given good advice in the first post and your response was very rude. Book a consultation with a professional

Thanks (2)
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By sash100
26th Jul 2020 11:29

You don’t deserve a response from anyone after being so rude and demanding from Matrix. What you are trying to do is complex and you have to take professional advice

Thanks (4)
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By Paul Crowley
26th Jul 2020 14:36

Getting advice
This helpsheet explains the restriction but it’s only an introduction. If you’re in any doubt about whether the restriction applies or how it operates, ask your tax adviser or phone the HM Revenue and Customs (HMRC) Income Tax general enquiries helpline.

From HMRC

Problem solved

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