United Kingdom
The world of international tax planning and wealth structuring involves the use of companies, trusts, partnerships and other legal arrangements based in traditional offshore financial centres and equally, onshore mainland jurisdictions. The United Kingdom is one such onshore jurisdiction which offers attractive benefits in the form of a full complement of company and partnership legislation, allowing for the registration of private limited companies and limited liability partnerships (LLP), for example, both of which are frequently used in complex wealth and international trading arrangements.
A major advantage of the United Kingdom as an international financial centre in and of itself is its vast network of double tax treaties. Attractive tax reduction strategies can be devised and implemented using the network of double tax treaties to reduce tax liabilities connected to dividend, interest and royalty payments.
Quite often, successful implementation of a tax saving scheme will necessitate the use of an English registered company or partnership constituted under English law, in conjunction with a corporate entity established under a treaty country to which the United Kingdom has ratified as a signatory. Malta and Cyprus are common low tax jurisdictions, which are often used in wealth structuring schemes. Additionally, the UK’s double tax treaties with the Isle of Man, Guernsey and Jersey has recently featured in land partnership trading schemes and employee benefit trusts arrangements.
When using an onshore jurisdiction in order to exploit treaty benefits, it is vital for tax advisors and private client lawyers to monitor the “pulse” of the political climate. This is imperative in order to anticipate future fiscal changes in the law that may be specifically enacted to close any loopholes afforded by the treaty signed by the UK and the other treaty partner.
