UK Tax Treatment of Delaware LLCs

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The UK’s tax treatment of limited liability companies in the US could remain mostly unchanged despite a recent Supreme Court decision in favour of taxpayers, the HMRC has confirmed.
In the Anson v Her Majesty’s Revenue and Customs (HMRC) case, the Financial Transaction Tax had found that the members of the LLC in Delaware, had an interest in the profits as they arose; therefore, the Supreme Court found that double tax relief was due.

Following the Supreme Court’s decision, individuals claiming double tax relief and relying on the Anson decision, may now have their claims considered on a case by case basis.

‘The decision of the UK’s highest court in favour of George Anson, a UK resident but non-domiciled member of an LLC based in Delaware, was specific to the facts found in the case’.

– Her Majesty’s Revenue and Customs.

In its briefing note, the HMRC said that the FTT’s findings in the case were based on both Delaware’s own laws relating to LLCs and the LLC agreement in this particular case. The HMRC also released the following guidelines:

Where US LLCs have been treated as companies within a group structure the HMRC will continue to treat US LLCs as companies.
Where a US LLCs has itself been treated as carrying on a trade or business, the HMRC will continue to treat US LLCs as carrying on a trade or business.
The HMRC also proposes the continuation of its existing approach to determining whether a US LLC should be regarded as issuing share capital or not.