UK Double Taxation Relief for the U.S. LLC

Your Guide to State, Local, Federal, Estate + International Taxation

A recent UK high court decision provides insight and HMRC may grant flow through treatment status for certain qualified United States LLCs. Prior to this decision, HMRC has denied UK investors relief from double taxation in the UK.

On July 1, 2015 the Supreme Court reached a decision in the case, known as Anson v Commissioners for Her Majesty’s Revenue and Customs (2015) UKSC 44, to allow a US LLC formed in Delaware to be treated as a partnership for UK tax purposes. Therefore, the LLC was considered to be taxed on the same income in both the U.S. and UK and the taxpayer were able to take a credit in the UK for the taxes paid in the U.S.

Although this ground-breaking decision may pave the way for more taxpayers to take the same position, the HMRC has indicated it will review such positions on a case by case basis. U.S. LLCs that want to claim similar treatment and relief from double-tax should be careful to review the state’s law where the LLC was formed and also the details of the operating agreement to determine if the facts are similar to that in the Anson case.

Please note this information is general in nature and should not be relied upon. Again, as we understand that at this time, this recent court victory is applicable only to the named taxpayer. Please consult with your tax adviser in the UK and U.S. for specific advice.

By Jill A. Helm, CPA