Background

Our client is a UK tax-resident individual with significant international business interests and investment assets. Although resident in the United Kingdom, the client’s medium to long term residence plans also remained fluid, and they are not a long-term UK resident for the purposes of the UK’s revised residence-based tax regime.

The client receives significant income from a variety of non-UK sources. This income arises entirely outside the United Kingdom and is generated through international commercial activities conducted overseas.

The client therefore sought specialist professional advice on the efficient administration and investment of international income and assets, while ensuring full compliance with applicable UK tax legislation. The advice obtained specifically considered the commercial rationale for the proposed structure and the potential application of relevant UK anti-avoidance provisions.

Objectives

The primary objectives were:

• To centralise the receipt and management of non-UK sourced income.
• To ensure that funds could be managed and invested professionally.
• To enhance governance and asset protection.
• To maximise long-term investment returns on surplus capital.
• To provide a mechanism for long-term succession planning.

Solution

Following receipt of the relevant professional advice, an Isle of Man trust and company structure was established.

As part of the wider family planning arrangements, the company issued separate classes of shares carrying different rights. This enabled the structure to distinguish between the respective interests of individual family members and accommodate their differing succession and wealth planning requirements within a single, professionally administered framework.

As certain family members had not yet reached the age of majority, the structure also incorporated Isle of Man discretionary trusts to hold their respective interests. This provided an additional layer of governance and independent oversight.

The Isle of Man company receives income generated from non-UK sources. Rather than distributing all profits immediately to the client, surplus funds are retained within the company and managed as part of a longer-term investment strategy.

The company is administered and managed from the Isle of Man by appropriately qualified professionals. Its governance procedures are designed to ensure that decisions are taken in the Isle of Man and that suitable controls are maintained over its corporate activities

Investment Strategy

Once received by the Isle of Man company, surplus funds that are not required for immediate expenditure are invested through a diversified investment portfolio.

The portfolio is intended to preserve and enhance capital over the long term by generating investment growth and income. By investing surplus cash rather than allowing it to remain unproductive in bank accounts, the client seeks to maximise potential returns while maintaining an investment approach consistent with their risk appetite and long-term financial objectives.

Outcome

The implementation of the Isle of Man trust and company structure has provided the client with a professionally governed vehicle through which non-UK-source income can be received, managed and invested.

By retaining surplus funds within the company and investing them through a diversified portfolio, the client has been able to pursue a long-term investment strategy aimed at maximising potential returns while maintaining appropriate governance, regulatory oversight and adherence to professional tax advice.

The discretionary trusts, together with the separate share classes and their differentiated rights, provide a flexible framework through which the respective interests of individual family members can be accommodated. The structure also supports longer-term succession and family wealth planning while providing appropriate governance and independent oversight.

This case demonstrates how, subject to appropriate professional tax advice, internationally mobile familes may use an Isle of Man holding structure to preserve and grow wealth generated from international sources, while maintaining tax compliance through robust corporate governance and professional investment management.

To learn more about the features and advantages that can make Isle of Man companies attractive for international planning, read Why Use an Isle of Man Company? What You Need to Know.

For a more detailed examination of the regulatory, tax and structuring considerations involved in selecting a holding company jurisdiction, read Choosing the Right Jurisdiction for a Holding Company: Why the Isle of Man Remains Top of the Shortlist

Get in Touch

If you would like to learn more about international wealth structuring, Isle of Man corporate structures, or the administration and investment of international assets, please contact the Dixcart team at advice.iom@dixcart.com.

Dixcart Management (IOM) Limited is licenced by the Isle of Man Financial Services Authority.