Many investors hold UK property through BVI (British Virgin Islands) companies to benefit from potential tax advantages. However, circumstances may change, prompting investors to extract the property from the BVI structure. This article explores how voluntary liquidation offers a low-cost, tax efficient solution for BVI companies owning UK property.
Why Extract UK Property from a BVI Company?
There are several reasons why an investor might want to extract UK property from a BVI company:
- Changes in tax regulations: Tax laws can evolve over time, reducing the initial tax benefits of holding UK property through a BVI company.
- Shifting investment goals: An investor’s investment strategy might change, making direct ownership of the UK property more suitable.
- Selling the property: For a straightforward sale, direct ownership can simplify the process.
Voluntary Liquidation: The Solution
Voluntary liquidation is a process available to any solvent BVI company. In the context of BVI companies owning UK property, voluntary liquidation allows for the transfer of the property ownership from the BVI company to the shareholders in a tax efficient way. This eliminates the BVI company structure and streamlines future property management.
Tax Benefits
Distributions from a liquidation are usually treated as capital rather than income and therefore subject to tax at capital gains rates.
The Process of Extracting the Property
Here’s a simplified breakdown of the process for extracting UK property through voluntary liquidation of a BVI company:
- Preparation: Consult with a qualified professional to develop a liquidation plan outlining the process, costs, and timeline.
- Directors Resolutions: The Directors of the company make a declaration of solvency, prepare a liquidation plan, and pass a resolution proposing to liquidate the company.
- Shareholder Resolution: The shareholders pass a written resolution approving the liquidation plan and appointing a voluntary liquidator.
- Liquidator Appointment: The liquidator is appointed and the company is formally in liquidation.
- Property Transfer: The property is usually distributed in specie to the shareholders. This means that the property ownership is transferred directly to the shareholders in proportion to their shareholding.
- Company Dissolution: Once the property and any other assets have been distributed to the shareholders, the BVI company is formally dissolved and removed from the BVI register.
Practical considerations:
The company will also need to instruct a UK property lawyer to assist with registering the transfer of the property with HM Land Registry.
To recognise the transfer, HM Land Registry will also require a legal opinion from a BVI legal practitioner. These can usually be obtained for around $1,000 and we can assist in obtaining these as part of our liquidation package.
Conclusion
Voluntary liquidation offers a viable solution for BVI companies wanting to extract UK property in a tax-efficient manner.
How we can help
Our voluntary liquidation service includes everything you need to extract your UK property from a BVI company, from appointment through to dissolution. Request a free quote below or contact with any queries.
Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as professional advice. Always consult with qualified legal and tax advisors before making any decisions regarding BVI company liquidation or UK property ownership.
