Expanding your UK business to the U.S.?
Don’t open an LLC before you read this.
The standard advice on U.S. entity formation was written with U.S. founders in mind. It doesn’t account for how HMRC treats the result, and that difference can be a costly one for a UK business owner.
In Anson v HMRC, a UK resident with a U.S. LLC faced the prospect of an effective tax rate of around 67%, the same income taxed in both the U.S. and the UK, with no relief initially available for the overlap. The dispute reached the UK Supreme Court, which ultimately ruled in Anson’s favour.
Form 5472
Penalty
BE-13 Survey
Max Fine
Usually
Wrong
This
Call
An LLC is the default recommendation. It’s also the structure that led to a dispute over a potential 67% effective tax rate for a UK founder.
In Anson v HMRC, a UK resident with a U.S. LLC faced the prospect of the same income being taxed in both the U.S. and the UK because the two countries classified the entity differently. HMRC argued that no double-tax relief was available, and the case ultimately reached the UK Supreme Court in 2015, which ruled in Anson’s favour. The case is often cited as an example of what can happen when U.S. entity advice is given without considering the UK tax position.
Formation services can open a U.S. LLC in a matter of minutes. What they can’t tell you is how HMRC will treat it, because that’s outside what they do, and it simply isn’t their concern. So that particular question tends to go unanswered.
“The question isn’t whether an LLC is right or wrong as a structure. It’s whether the person recommending it has considered how HMRC treats it, and that’s usually a very different conversation.”
The right structure depends on your specific situation, and there isn’t a universal answer. The call is how you work that out.
These aren’t rare issues, they’re common risks for UK founders using the wrong structure.
Foreign-owned U.S. entities must file Form 5472 annually. Missing it, or filing it incorrectly, triggers an automatic $25,000 penalty per form.
The Bureau of Economic Analysis requires most foreign-owned U.S. entities to file a BE-13 survey. Most founders have never heard of it. Maximum penalty is $44,000.
HMRC and the IRS don’t always treat the same entity the same way. When they don’t, the same income can be taxed in both jurisdictions, with no relief available.
IRS and HMRC requirements that sit between your UK and U.S. advisers, neither of whom may know the full picture.
Thirty minutes with someone who understands both sides, before you commit to anything.
Which structure is appropriate for your specific situation, not a default recommendation given without knowing your UK position.
HMRC’s treatment of foreign entities isn’t always what formation services assume. That matters before you file anything.
The annual requirements for foreign-owned U.S. entities that most formation services don’t mention, and the consequences of missing them.
Not every risk applies to every business. The call identifies which ones are relevant to your structure, revenue, and operating model.
If you’re working with existing UK or U.S. advisers, you’ll leave the call knowing what to ask them, and what they may have missed.
You’ll know what you’re walking into before you set anything up. Not a list of risks. A straight answer for your specific situation.
UK businesses planning a U.S. expansion, before they’ve committed to a structure.
Trading, with real revenue, not a start-up.
Actively planning, not just researching. You want to move when the time is right.
Founder, CEO, CFO, or Director, with the authority to act on what you hear.
The call is most valuable before you file anything. The right time to ask these questions is before the structure is in place.