It is this third category of qualification, which is most important, as it means that companies, incorporated on Isle of Man but wholly owned by non-residents, will continue to enjoy tax- free status.

Companies will have to apply for distributing status but exact means by which they will do so has not as yet been decided. The Government has however indicated that companies which have successfully claimed such status may not be required to submit accounts with every tax return providing sufficient information is provided on return to support claim.

There are further rules which apply to companies which are wholly or partly owned by Isle of Man residents and these companies will be obliged to calculate tax payable on that part of profits applicable to local shareholders and to pay it over to Treasury.

The new system will accord with international obligation for Isle of Man not to discriminate between onshore and offshore companies and enable it to escape sanctions, which may be invoked against some of other offshore centres.

Exposure to taxation can be limited if, instead of property being registered in name of investor, title is held in name of a company formed in a tax free area, British Virgin Islands for example. This subject is covered below.

There is of course one other important factor in this equation,

The Tenant

It is important to take up references on a tenant both to ensure that he can pay rent and that occupants are likely to keep premises in good condition. Amongst preferred tenants are professionals such as bankers, stockbrokers, financiers, solicitors etc. many of whom require a property only when they are in city and who have no interest in purchasing.

Furnished or Unfurnished

This is a decision to be taken in light of objectives of investor. If he is looking for a long- term tenant, unfurnished may be answer. The typical tenant described above may prefer a furnished property however.

Structuring investment

As mentioned above, in order to reduce exposure to taxation, property should be registered in name of an offshore company, shares in which are owned by investor. By this means our foreign domiciled, non-U.K. resident investor can,

•Eliminate completely any liability to inheritance tax •If each property is held within a separate company, avoid risk that on a future sale proceeds will be treated and taxed as trading income.

It is very important that company itself be managed and controlled from a non-taxing jurisdiction and this is where Chesterfield Group can help. Our services include,

•Forming company in a suitable location •Acting as Directors and Secretary •Maintaining Registers and filing returns required by law •Keeping accounting records and preparing annual financial statements •Filing tax returns •Liasing with solicitors, property managers etc. as required