Corporate held - Offshore Bond
GMRJM
Member
Good morning team,
We have a client with a Corporate held offshore bond, which we'd ideally shift to our preferred platform.
The bond is taxed on the fair value basis.
Are there any tax implications of selling down the offshore bond to cash, withdrawing to company bank account and then opening up a new account at preferred platform?
Our thinking is the only tax is corporation tax due on the gain since last accounting period, which was recently.
Lastly, with the bond being taxed on fair value basis and no 5% tax deferred allowance, is there any difference from a corporate held GIA?
Any help, much appreciated!
Many thanks
Comments
I agree there should only be tax on the disposal assuming it has risen in value since the end of the last accounting period.
The accounting of equity OEICs in the GIA is different - you have to account for the increases in value every year but you don't pay the tax until the gains are realised.
Our corporate investing stuff is here - https://www.mandg.com/wealth/adviser-services/tech-matters/investments-and-taxation/corporate-investment
@les_cameron
Thanks very much, Les.
Forgive me if I'm being stupid here - to confirm, no annual corporation tax on the equity OEIC unrealised gains? If so, why report?
Also, who checks if its an equity OEIC? Is this an annual test?
It's one for the accountant to confirm but it's basically the rules as we understand them - you need to revalue the assets and reflect that in your accounts. I assume they then have to make another entry allowing for the deferred tax liability but not sure.
Practically, I don't know who would check. That's one to ask the accountant and what they expect. Also with equity OEICs held by a company then the income will be streamed so whereas an individual will get told how much dividends they received companies get it split into interest and dividends.
@les_cameron thank you, much appreciated!!
If you use offshore funds then it can get annoying with excess reportable income compared to bond - even if you use income units (which I'd recommend) you aren't guaranteed to avoid this issue in a GIA.
Use single asset class funds to sidestep all other tax issues associated with MA funds in corporate ownership (although this is an accountant issue not an advice issue)