I live in HK working for a company and plan to be here for a few years.
I also own a limited company in the UK which I set up before I moved to HK. The UK limited company owns a UK hotel which has on the ground management and staff that run the hotel day to day. As the main shareholder (and company secretary and director) I provide a lot of oversight to the business, set strategy, hire and fire the General Manager etc, review the sales daily etc. My title if I had one might be managing director.
For the past few years the business has been in start-up phases and has not made a taxable profit and I have therefore not burdened the business with any salary for me – what’s the point if I have then put more cash funding in partially to cover a payment to me?
The business is now becoming profitable, however, so should be
a) be in a position to pay me for my MD services and
b) begin to attract UK corporation tax (small company, @ 20x%)
I am considering setting up a HK company that would charge the UK company for my services, approximately equal to the free cash flow of the company. My thinking being this will reduce my UK corporation tax and this consultancy fee when received in HK could be dividend-ed out of the HK co to me on a tax free basis.
Does anyone see a problem with this from a legal point of view in either the UK or HK? Thanks