US-UK Tax Talk
Welcome to US-UK Tax Talk, brought to you by Collyer Bristow. Hosted by Aidan Grant, a Partner in our Tax & Estate Planning team, this series explores the complex world of cross-border tax and estate planning.
Aidan specialises in advising high-net-worth individuals with UK-US interests, including mixed-domicile marriages, UK-resident US citizens, and beneficiaries of US trusts. Named in Citywealth’s Top 100 Future Leaders, he brings expert insight and practical advice to every episode.
Join us as we engage with leading professionals across the UK and US, covering everything from wills and trusts to charity tax, and moving to the UK. Expect straight-talking discussions on English tax law - always with a US perspective.
Subscribe now and stay informed on the latest in UK-US tax and estate planning. For expert advice tailored to your needs, visit collyerbristow.com.
Disclaimer: This content is provided for general information only and does not constitute legal or other professional advice. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information contained in this material.
US-UK Tax Talk
The Anson Case and How the UK Really Taxes LLCs with James Austen and Henry Lopes
In this episode of US-UK Tax Talk, host Aidan Grant is joined by colleagues James Austen, Partner, and Henry Lopes, Associate in the Tax & Estate Planning team at Collyer Bristow, for a deep and detailed exploration of one of the most challenging areas of US-UK personal taxation: how the UK treats US Limited Liability Companies (LLCs) and why this continues to create double, and sometimes triple, taxation for American taxpayers living in the UK.
While LLCs are a common planning tool in the United States and are generally treated as tax-transparent, the UK often takes the opposite approach, treating them as opaque corporate entities. This mismatch leads to substantial tax exposure for UK-resident members. Aidan, James, and Henry walk listeners through the legal characterisation issues, the risk of UK corporation tax, the complexities of the Anson Supreme Court case, and HMRC’s increasingly aggressive stance in the years since.
Americans living in the UK face one of the most complex cross-border tax environments in the world, and when an LLC enters the picture, that complexity multiplies. Together, the team break down how differing legal systems, conflicting tax treatments, and HMRC’s updated 2023 guidance collide to create one of the most problematic issues in the US-UK tax world.
Join us on the first Wednesday of every month for a new episode of the US-UK Tax Talk podcast, brought to you by Collyer Bristow. Watch recent episodes on Collyer Bristow’s YouTube channel, and connect with our Tax & Estate Planning team.
Key Take Aways:
Understanding the US-UK LLC Mismatch:
In the US, LLCs are generally treated as tax-transparent, with profits flowing directly to their members. The UK, however, often treats LLCs as opaque corporate bodies, taxing the entity rather than the individual. This creates a fundamental mismatch, meaning income taxed once in the US may be taxed again in the UK without relief.
Why Characterisation Matters:
The UK must decide how to classify foreign entities that don’t have clear UK equivalents. LLCs sit at the centre of this problem. HMRC frequently argues that LLC income belongs first to the company, not the member, leading to double taxation regardless of how the US treats the same income. This characterisation question is central to every LLC case.
Why Anson Doesn’t “Fix” the Problem:
The 2015 Anson v HMRC Supreme Court case initially appeared to resolve the issue in favour of transparency. However, HMRC now argues that Anson was decided on narrow findings of fact and does not apply broadly. Updated 2023 guidance makes clear that HMRC considers most LLCs to be opaque, and the department is openly seeking a new “Anson 2” case to challenge taxpayers.
Legal Analysis Is Essential:
Successful reliance on Anson requires a two-part legal analysis:
- State Law Review: Does the LLC’s governing state law allocate profits directly to the members?
- Operating Agreement Review: Do the specific terms mimic transparency or suggest corporate-style decision-making?
Even small wording differences in an operating agreement can fundamentally change the tax outcome.
Plan Before You File:
Taxpayers are far better protected when they seek advice before filing their UK return. Legal opinions, proper documentation, and clear disclosure place taxpayers in the strongest possible position against HMRC challenges. Those who delay often face higher costs, greater risk, and the possibility of becoming HMRC’s next test case.
