Jersey foundation

I have a client who is both resident and domiciled in the UK and who is considering setting up a Jersey ‘foundation’. The reason for establishing the offshore entity is more for commercial than for tax mitigation purposes.

Currently my client is the major shareholder in a UK holding company with numerous UK trading subsidiaries all of which are profitable and subject to UK corporation tax.

The proposed idea would be to place the foundation above the UK holding company in the structure so that the post-corporation tax dividends collected in the holding company are paid up to the Jersey foundation.

My query is not concerned with the UK tax implications of extracting the funds from the foundation although readers’ comments would be welcome on this; but rather how will HMRC treat the group-wide post-tax profits that accumulate in...