Reply to post: Re: Will it work?

BBC encourages rebellious Welsh town to move offshore

jonathanb Silver badge

Re: Will it work?

I'm not. Avoiding UK corporation tax is not as simple as registering a company in another country.

If it is controlled by persons resident in the UK, you need to pass an economic justification test to avoid UK corporation tax. Richard Branson for example owns a hotel in the British Virgin Islands, so there is a good reason for having that in a BVI registered company. If the hotel was in another country, then it wouldn't pass the test.

The other problem is the place of establishment test. If you are selling stuff in a shop in the UK, that is always taxable in the UK. You can try and move bits of the business not related to the selling activity elsewhere, thus reducing the profit made in the UK. Starbucks for example has an office in Switzerland that deals with importing coffee beans. Their coffee buyers are highly skilled people, so they can command a very good profit margin on selling these beans onto the UK stores. The reliable, high quality of the beans these people secure is absolutely fundamental in getting people through the door to pay premium prices for their coffee. The important thing though is that you do need to have the people that do this in Switzerland, otherwise you don't pass the economic justification test, or the place of establishment test.

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