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Best American tax news for YEARS – HMRC loses in the Supreme Court, LLCs are fine

1st Jul 2015
Managing Director, American Tax Returns Ltd American Tax Returns Ltd
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In a decision announced today, the Supreme Court of the United Kingdom unanimously agreed that a United States LLC incorporated in Delaware can be treated for UK tax purposes as a partnership. The Court decided that a UK resident member of an LLC is therefore taxed by both the UK and the US on the same share of income and – most importantly – can now claim credit in the United Kingdom for US tax paid on the income.

Today’s decision follows several years of tough argument, with HMRC taking the view that all United States LLCs had the character of a corporation. It also reverses the decision of the Court of Appeal who had sided with HMRC on this subject.

LLCs are popular structures for investors in businesses and properties within the United States, as they combine the advantage of limited liability with relatively straightforward tax treatment by the United States.

The decision in this case, known as Anson v Commissioners for Her Majesty’s Revenue and Customs [2015] UKSC 44, is going to delight many investors. Unless HMRC want to spend time looking at every other State outside of Delaware and the specific wording of every LLC agreement, we should - at long last - have the same treatment of LLCs in both the UK and the US. Today’s ruling should also encourage business between the UK and US by providing clarity and certainty for tens of thousands of UK investors investing in the United States.

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By Satwaki Chanda
05th Jul 2015 11:16

Link to case

Thank you very much, very well explained.

You can access the judgment at this link. Should be interesting to read this.

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