British Controlled Jurisdictions are Best Avoided for Offshore Business
Redomicile simply means to change the location where your company reports and files its annual information. It’s possible to redomicile companies from unfavourable locations to jurisdictions with stronger privacy and asset protection regulations.
Why would you want to redomicile your company?
Offshore jurisdictions like The Cayman Islands and The British Virgin Isles (BVI) have long been popular for offshore business. There were good reasons for this. These jurisdictions offered low taxes, financial privacy and efficient services. Business is conducted in English, making dealings with banks and lawyers simple.
The BVI have the largest register of offshore companies in the world. Amusingly the BVI are the largest foreign investors in China due to people using BVI Companies to do business in there.
Registers of Beneficial Owners
Unfortunately there’s no longer any advantage to using an offshore company from one of the main British controlled territories. Due to the global drive for transparency and information sharing all of these jurisdictions have caved to demands to publish the names of beneficial owners of corporations. This is the opposite of what anybody who values privacy and wants to protect their assets wants to achieve.
Worse than that, the Common Reporting Standard (CRS) obliges banks in all of those jurisdictions to report account details to their home government. HMRC, the British tax authority, received 5.67 million records from CRS in 2019.
Secrecy does not exist in the British controlled offshore jurisdictions.
Foreign Judgements are Recognised
All of the British controlled jurisdictions will recognise foreign judgements. If any creditor gets a judgement against a Company based in a British jurisdiction they can easily get that judgment recognised by a local court. This allows any pursuer who obtains a judgement to start attacking the company’s assets worldwide. They can even get control of the offshore company by having the court appoint a liquidator.
There is no asset protection for companies incorporated in British jurisdictions.
Go Somewhere with a different language
Of course the English language is prevalent throughout the world. Previously it was a big advantage to be able to deal with lawyers and banks where English was their first language. However, this also makes it easier for any pursuer to get information and deal with the courts and government officials. It puts a major road block in the way of any potential pursuer if they’re forced to have documents translated and aren’t able to have conversations easily with functionaries in the overseas jurisdictions.
It’s going to be substantially more difficult for any pusuer to navigate the bureaucracy in a jurisdiction like Panama where English is not the first language compared to a jurisdiction like The Cayman Islands.
Mutual Legal Assistance Treaties
All of the British overseas jurisdictions have Mutual Legal Assistance treaties. That means that they’re obliged to help investigators in other countries like the UK and the USA when they want information on your affairs. If you’re being investigated for anything in your home country expect any of the British jurisdictions to spill the beans on your private business pretty damn quickly.
Redomicile Companies Located in any British Controlled Offshore Jurisdiction
It’s not widely known that companies can change their domicile just like an individual can. If you have a company located in The BVI, The Cayman Islands, The Turks and Caicos, Bermuda or The Channel Islands you should consider changing its domicile to somewhere that respects privacy and where the assets of the company will be more secure.
It’s easy to redomicile a company to a more favourable jurisdiction like Nevis, The Cook Islands or Panama. All you have to do is file some paperwork in each jurisdiction and your company can change its location and become much more private and secure.
Alternatives to Redomicile
In many cases it’s not worth having an offshore company at all. If it’s located in a British jurisdiction it has no privacy, it’s assets can be seized easily by creditors and if the beneficial owners are domiciled in a high tax country they’re likely to be subject to Controlled Foreign Corporation (CFC) rules. In those scenarios they may as well save the annual filing fees and use a local company.
Other alternatives to redomicile are to close the company located in the less favourable jurisdictions and incorporate a new company in a jurisdiction with stronger protections. The assets of the old company can be transferred to the new company. This may afford more secrecy as anyone following the company will only be able to see that it no longer exists. They will have no idea that its assets have been transferred to a newly incorporated company in a different jurisdiction.