Posted by Nick Day on 07 Jul 2015
US LLCs: change in UK Tax Treatment
The UK Supreme Court has recently issued a final judgement in the long running case of Anson v HMRC (the Swift case), which has been appealed several times but has finally been decided in the taxpayer’s favour. The ruling by the Supreme Court is that Anson is entitled to double taxation relief and can claim credits via his UK tax return for US federal and state taxes paid on his share of a US LLC’s profits.
This represents a significant change in the way HMRC will need to treat UK tax residents with interests in the profits of US LLCs, implying that the LLCs will be treated as transparent entities for UK (as well as for US) tax purposes. Previously, HMRC would tax individuals on distributions from LLCs as and when they were paid out, and restrict credits for foreign tax paid. If you have an interest in a US LLC you will need to review how you will be treated in light of this ruling. It is anticipated that HMRC will provide guidance on how this decision will be interpreted in future and also for prior years.
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