Setting up your own business in the UK
As a US person living outside of the US you have additional filing obligations required by the IRS if and when you own or become shareholders in foreign corporations. Of course, this may still be the ‘best answer’, but many ex-pats overlook these additional filing obligations or are misadvised as to the repercussions by their accountants.
We have set out below some of the main requirements you will need to be aware of in relation to UK (or other foreign) business owned by US taxpayers.
Form 5471: ‘Information Return of US Person with Respect to Certain Foreign Corporations’
Who Must File:
Form 5471 must be completed for any US person who owns 10% or more of the shares in a non-US company at any point during the year.
When to File:
The completed Form 5471 must be filed by April 15th for the previous year as an attachment to the taxpayers Income Tax Return Form 1040. Extensions of time to file the years’ tax return for an additional 6 months to October 15th will also extend the filing of the related form 5471 for the year.
What to Report:
The Form must report the shareholdings of all US persons in the company at the beginning and end of the year, as well as the balance sheet and profit and loss account of the company for the applicable year.
The IRS charge penalties to taxpayers of up to $10,000 for each Form 5471 that is filed after the due date or does not include complete and accurate information.