www.offshoretax.co.uk

There are certainly scenarios where offshore companies can be attractive in tax terms but they're not as widespread as many people think.

I If you're using an offshore companty the main advantage is that if it's non resident it will be exempt from tax on any gain on a future disposal. However, to counteract these massive tax banefits there are a number of anti avoidance rules that cover the management of the company and the location of the shareholders. If these apply they can eliminate the tax benefits of using the offshore company. Therefore if you are planning on using a company it's often a case of avoiding these anti avoidance rules. 

We've published a report that looks at the tax treatment of offshore companies for purchasing overseas property, and goes through exactly when you can and can't obtain UK tax benefits by using a company. This is on our main site and can be viewed here

This depends on exactly what you want to use it for, and what your specific tax status is. There are some significant restrictions on UK resident and domiciled individuals using offshore companies. Generally you'll have the best opportunities to use an offshore company to avoid UK tax if:

• You're non UK resident, or
• You're non UK domiciled
• You are trading overseas
• The company is owned by a trust
• The company is controlled from overseas

See this article for more details:

When can you use offshore companies and trusts to avoid tax 

This will depend on your specific position and what you intend to use the company for. There are lots and lots of anti avoidance provisions in this area and using an offshore company is pretty well regulated in terms of UK tax.

We've looked at the position in detail in this article on Using an offshore company or trust to avoid tax 

If you become non UK resident by moving offshore avoiding UK taxes is much easier, however, inthis case you're looking to use offshore opportunities to avoid UK taxes whilst continuing to live in the UK. This is something the UK taxman doesn't like, as whilst there's not much they can do about non UK residents, if you live in the UK they'll do what they can to stop you reaping the offshore benefits.  

To give you an idea, the main problems in using an offshore company are:

- Company residence
- Transfer of assets abroad legislation

The offshore company would be classed as UK resident if its management and control was situated in the UK.  If you as the shareholder was UK resident the only way you could argue that the company was non UK resident would be to appoint an independent overseas board of directors. Nominee directors would not be acceptable to HMRC if they acted purely as nominees for you. In this case the company  would be controlled from the UK and would be UK resident.

Another option in terms of  residence would be to use an offshore trust to hold the shares. The offshore trust would need to have overseas trustees and in conjunction with the overseas directors this may make it easier to establish non UK residence for the company.

The use of a trust would however complicate matters especially if you are a UK domiciliary.

The other issue with the use of an offshore company is the transfer of assets abroad provisions  principally contained in S739. These are pretty wideranging and can attribute income to UK resident shareholders in certain circumstances. However there are a number of exemptions from these which you may be entitled to (eg essentially for normal commerical operations).