CFO Advisory
Form 5472, Form 5471, Form W-8BEN-E, Form 8833
Finance and tax decisions for companies operating in both countries: funding a US subsidiary, returning profit, raising capital and planning cash.
What does CFO Advisory involve?
Many finance decisions in a cross-border group are also tax decisions. How a US subsidiary is funded, how profits come back to the UK and which company investors buy into each have consequences on both sides. We work with the board on those decisions and model them in both countries before they are made.
Forms and filings involved
- Form 5472
Reporting for US corporations with a significant foreign owner, and for single-member US LLCs owned by someone outside the US.
- Form 5471
The information return a US citizen or green card holder files for a UK limited company they own, control or have acquired an interest in.
- Form W-8BEN-E
The certificate a non-US entity gives a US payer to confirm its foreign status, FATCA classification and any treaty claim.
- Form 8833
The disclosure required when a US return relies on the US-UK treaty to override or modify the ordinary US tax rules.
- Treaty
How the US-UK income tax treaty allocates taxing rights, and where its saving clause limits what US citizens can claim.
Finance decisions with a tax result in two countries
Funding a US subsidiary is the first choice most UK groups face.
Equity is simple but can only be returned through dividends or a capital reduction. An intercompany loan lets cash come back as interest and principal, but interest deductions are restricted on both sides: in the US under the business interest limitation, and in the UK under the corporate interest restriction for larger groups. The loan terms also have to stand up as arm's length in both countries.
Returning profit to the UK raises withholding and timing questions. The treaty can reduce US withholding on dividends paid to a UK parent company below the portfolio rate, or remove it where its conditions are met, and UK companies can generally receive foreign dividends free of corporation tax under the distribution exemption. The parent must satisfy the treaty's limitation on benefits article and give the payer a Form W-8BEN-E. Management fees and royalties are alternatives, each with its own treatment.
Fundraising brings the structure question back. US investors usually want a Delaware parent, while UK angel investors may want SEIS or EIS relief, which has its own conditions on the company. Moving an existing UK company under a new US holding company is possible, but it usually involves seeking HMRC clearance and a view of how the share exchange affects shareholders in both countries. We map the options, including their tax cost, before the board commits to one.
Board-level questions we model
- 01
- Debt or equity funding for a US subsidiary, with interest limits applied
- 02
- Dividend, management fee and royalty routes for returning profit
- 03
- Treaty withholding and limitation on benefits reviewed before cash moves
- 04
- Holding company structure for a US funding round, including any share exchange
- 05
- Cash flow forecasts in both currencies with tax payments scheduled
Who this is for
UK groups expanding into the US through a new subsidiary
- US companies building a UK operation with local staff
- Founders preparing for a funding round with US and UK investors
- Boards without a finance director who knows both tax systems
Why US UK Tax Returns
Each return is prepared with the other country's return open beside it, so a credit, election or disclosure on one is supported by the other.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
Should we fund our US subsidiary with a loan or with share capital?
It depends on how soon you expect cash back and how profitable the subsidiary will be. A loan allows repayment and interest without a dividend, but the interest must be at an arm's length rate, and deductions can be restricted under US and UK interest limitation rules. Share capital is simpler to document. Many groups use a mix, and the balance is worth revisiting as the subsidiary grows.
How much US tax is withheld when our US subsidiary pays us a dividend?
Without treaty relief, 30%. The treaty reduces this for UK residents, and a UK parent company holding a substantial stake may qualify for a rate below the 15% portfolio rate, or for exemption, provided it meets the limitation on benefits tests. The parent certifies its position on Form W-8BEN-E. The UK side is usually simpler, because most dividends received by UK companies are exempt from corporation tax.
Our US investors want us to flip into a Delaware company. What does that involve for tax?
Usually the shareholders exchange their UK shares for shares in a new US parent, so the UK company becomes a subsidiary. In the UK, relief from an immediate capital gains charge is commonly available on a share exchange, and advance clearance from HMRC is often sought. US shareholders face separate US rules on transfers to a US corporation. Tax-advantaged UK shares can lose their status, so each class of holder needs checking.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
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Ready to talk it through?
Tell us where you live, what you hold and which years are outstanding. We will say what applies and what it involves before any work begins.
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