Jessica Jarvis

In January 2025, headlines were dominated by reports that Roman Abramovich could face a potential £1 billion tax bill from HMRC. While the case is still developing, it serves as a stark reminder that even the most sophisticated offshore structures can come under intense scrutiny from tax authorities. For wealth planners, trustees, and UHNW families, the question isn’t whether offshore planning remains relevant – but how to future-proof these structures in an era of unprecedented transparency, enforcement, and political momentum.

The Abramovich case highlights a growing trend: global tax authorities are moving aggressively to clamp down on offshore arrangements that they perceive as opaque or non-compliant. Even where structures were legitimate when set up, shifting laws and rising enforcement make proactive management critical.

Under the Microscope

Offshore structures have long played a legitimate role in asset protection, succession planning, and international wealth management. But the world has changed:

1. Transparency has caught up: Automatic exchange of information (CRS), FATCA, the UK Trust Registration Service (TRS), and the Register of Overseas Entities (ROE) have made it far easier for tax authorities to access detailed data about offshore structures and beneficial owners.
2. Reputation risk has skyrocketed: Media scrutiny and public sentiment post-Panama and Pandora Papers have made even legitimate offshore structures a potential reputational hazard for UHNW families.
3. Political appetite for reform is growing: Both main UK political parties have flagged reforms to the non-dom regime, potentially ending the remittance basis and increasing the exposure of offshore trusts to UK tax.
4. HMRC’s enforcement capability has improved: With enhanced data sharing and AI-driven analytics, HMRC can identify patterns, anomalies, and potential non-compliance more effectively than ever before.

The Abramovich case may or may not result in a billion-pound tax bill, but it sends a clear message: the time to future-proof is now.

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Practical Strategies for Future-Proofing Offshore Structures

1) Management and Control

A common trigger for HMRC scrutiny is the question of where an offshore company or trust is managed and controlled. If key decisions are made by UK-resident individuals, HMRC may argue the entity is UK resident for tax purposes, bringing its income and gains into the UK tax net.

Steps to take:

• Ensure board meetings take place offshore, with directors physically present.
• Appoint genuinely independent offshore directors with real decision-making power.
• Document all decisions thoroughly, demonstrating substance and independence.

2) Governance and Economic Substance

Offshore entities must now demonstrate economic substance under laws introduced in jurisdictions like the BVI, Cayman Islands, and Jersey. Substance is more than a formality – it’s about genuine operational presence.

Best practices include:

• Maintaining staffed offices offshore where required.
• Ensuring the entity has commercial purpose and activity within the jurisdiction.
• Keeping detailed records of operations, personnel, and decision-making processes.

3) Trust Documentation

Modern structures need flexibility to adapt to changing tax laws and regulatory environments. Trusts and companies set up even a few years ago may no longer be fit for purpose.

What to review:

• Trust deeds: Do they allow for changes in jurisdiction or trustee appointment if tax or legal environments change? Are protector powers appropriately drafted?
• Company constitutions: Do they give too much control to UK-resident individuals? Is there a clear separation of powers?

4) Transparency

Opacity is no longer a sustainable strategy. Structures that fail to comply with disclosure regimes are at risk of financial penalties, litigation, and reputational damage.

Action points:

• Ensure compliance with the UK Trust Registration Service (TRS) if there’s a UK connection.
• Review reporting obligations under CRS and FATCA to ensure full compliance.
• Consider the impact of the UK’s Register of Overseas Entities (ROE), particularly for offshore entities owning UK property.

5) Forward-Thinking

Governments around the world are under pressure to close perceived tax loopholes in offshore planning.

On the radar:

• The potential abolition of the UK remittance basis and transition to a residence-based system.
• UK taxation of offshore trust income and gains, especially where UK-resident settlors, beneficiaries, or protectors are involved.
• Global minimum tax rates (BEPS Pillar Two) and their impact on multinational structures.

6) Client Education

Even the best structures can be undermined by uninformed beneficiaries. Family members must understand their roles and responsibilities to protect the integrity of the structure.

Family governance should cover:

• Rules on participation in offshore boards or trustee decisions.
• Guidelines on distributions to UK residents and tax compliance obligations.
• Succession planning to prevent future conflicts or unintended tax expo

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Be Strategic – Governance Over Secrecy & Flexibility Over Rigidity

The days of “set it and forget it” offshore structures are over. Today’s wealth planners need to focus on:

• Governance: Well-documented, transparent governance can demonstrate that offshore structures are managed appropriately and comply with local laws.
• Flexibility: Trusts and companies should be structured with the ability to adapt as laws and political climates change.
• Proactivity: Regular reviews, clear family governance frameworks, and ongoing compliance checks are essential to stay ahead of regulators and avoid costly mistakes.

The Abramovich case is a cautionary tale that offshore structures, no matter how sophisticated, are vulnerable to challenge. Tax authorities are more connected, better resourced, and politically motivated to clamp down on arrangements they perceive as abusive.

For families and trustees seeking to protect wealth legitimately and responsibly, proactive governance, transparency, and flexibility are now non-negotiable.