The £20,000 form for a company that owes no tax at all

Figures relate to tax year 2025-26 (UK) · 2025 (US)

You set up a Delaware LLC to invoice American clients. It took ten minutes and about a hundred dollars. Nobody mentioned an annual filing, because the website that sold you the company had no reason to.

Then somebody tells you about Form 5472. The company may owe no American tax whatsoever, and the penalty for missing this return is still $25,000 for the year.

Key takeaways

• A US LLC with one foreign owner must file annually, even with no tax to pay.
• The penalty starts at $25,000 per year, per form, and it applies automatically.
• The filing is Form 5472 attached to a mostly blank Form 1120 shell.
• Moving your own money in or out of the company counts as a reportable transaction.
• The company needs an American tax reference number before it can file.
• HMRC may treat the same company as opaque, which creates its own problem.

What is Form 5472?

It is an information return about transactions between an American company and its foreign owners or related parties. It reports no profit and calculates no tax. It simply tells the IRS what money moved and in which direction, which is why people miss it so easily.

Since 2017 Form 5472 has applied to single-member LLCs owned by foreign persons. Before that these companies were invisible to the system.

So a company formed in 2016 and one formed last week now sit under the same rule. We see plenty of the former, still unfiled.

Who has to file one?

Any US limited liability company with a single owner who is not American. That covers a British citizen, a British company, or anyone else outside the American system. The Form 5472 rule looks at the owner rather than the business, so a dormant company with no customers still files.

Multi-member LLCs follow a different route, usually a partnership return with statements for each member. Our guide to a UK LLP and Form 8865 covers the reverse case.

Corporations formed in America file their own returns too. The trap here is specific to the single-member LLC, which most people assume is invisible.

What counts as a reportable transaction?

Far more than you would expect. Contributing capital counts, and so does taking money out. Paying a company expense from your personal account counts too, however small the amount was.

Lending the company money counts, and so does repaying that loan. Per IRS guidance, the definition reaches almost any movement between you and the entity.

Even the formation itself counts, because paying the registration fee moved money into the company.

That breadth catches dormant companies. A company with no trade at all still reported something in its first year.

What does the filing actually look like?

Two documents stapled together. A Form 1120 with the name, address and reference number filled in and almost every other box empty, and Form 5472 behind it carrying the real content. The IRS calls the 1120 a pro forma return, which simply means a shell.

It goes in by post or fax rather than through the ordinary electronic channels. That surprises people used to filing everything online.

Keep proof of posting. With a $25,000 penalty attached, a tracking number is cheap insurance.

A worked example

The figures below are illustrative and use round numbers to show the mechanics.

Anna lives in Leeds and formed a Wyoming LLC in 2023 to take payments from American clients. She put in $2,000 of her own money, drew out $40,000 over the year, and paid a software bill of $600 from her personal card.

The company owed no American tax, because she did all the work in Britain. She still had three reportable transactions to disclose.

She filed nothing for two years. Bringing her up to date meant two returns and a reasonable cause letter, and that letter is the only thing standing between her and $50,000.

When is it due?

The 15th day of the fourth month after the company year end, which means 15 April for a calendar year company. An extension request moves that to October, and it must go in before the original date rather than afterwards.

The British tax year has no bearing on this. The company follows its own calendar.

Diarise it separately from your self assessment. Mixing the two deadlines is how people miss this one.

The deadlines and penalties at a glance

Does the company owe American tax?

Often not. Where all the work happens in Britain and the company has no office, staff or dependent agent in America, there is usually no American business to tax. Customers being American does not by itself create a taxable presence, which is the point most people get wrong in the other direction.

Where the company does trade in America, the owner files a personal non-resident return as well.

So the reporting and the tax are separate questions. Answering one tells you nothing about the other.

How does HMRC see the same company?

Differently, and this is the part that costs real money. Britain has generally treated a US LLC as opaque, meaning it looks like a company rather than a transparent vehicle. America treats the same single-member LLC as invisible and taxes the owner directly.

That mismatch can break your foreign tax credit, because the two countries tax different people on the same profit.

Take advice before assuming relief will be available. The mismatch is well known and it has no tidy answer.

Do you need an American reference number?

Yes, and it has to come first. The company cannot file anything without an employer identification number, and obtaining one as a foreign owner usually means a paper application rather than the instant online route. Allow several weeks, and longer if the application comes back for correction.

Start the application well before the deadline. Waiting on a reference number is not reasonable cause for filing late.

Keep the confirmation letter somewhere safe. Replacing it is slow.

What about state filings?

They continue regardless. Delaware charges an annual franchise tax, Wyoming wants an annual report, and most other states want something similar. These sit entirely apart from the federal filing and carry their own deadlines.

Registered agent fees run alongside them. Miss those and the company can be struck off without you noticing. Our guide to US sales tax for UK sellers covers the other American obligation these companies meet.

Check the state position once a year alongside the federal one. Two reminders in the same week are easier to keep than two scattered across the calendar.

A struck-off company does not end the federal obligation for years it existed. That catches people who simply walked away.

How to get the filing done

1. Confirm the company has a single owner and that the owner is not American.
2. Obtain an employer identification number if the company has none.
3. List every movement of money between you and the company for the year.
4. Convert each amount to dollars using a consistent and documented method.
5. Complete Form 5472 and attach it to a pro forma Form 1120.
6. Send it by a method that gives you proof of delivery.
7. Diarise next year's date and keep the records that support the figures.

What if you never filed?

You are in common company, and the fix is usually to file the missing years with an explanation attached. Reasonable cause can reduce or remove the charge, but it needs a genuine account of what happened rather than an apology. Filing before anyone contacts you also reads considerably better.

Do not file a stack of returns silently and hope. A short covering letter changes how the package gets read.

Where the company also traded in America, sort the personal return at the same time.

Does the form ask for your personal details?

Form 5472 asks for the owner, yes. The return names you, gives your address, and states which country you pay tax in. It also asks for a foreign reference number where one exists, which for a British owner usually means the unique taxpayer reference.

That information sits with the IRS rather than going anywhere public. Companies House has no equivalent of it.

Britain and America exchange information routinely now. So treat the two filings as telling one consistent story.

Should you keep the company at all?

Ask that honestly. Many British freelancers form an American LLC because a forum suggested it, then discover it adds annual cost and annual risk without adding a single commercial advantage. American clients pay British companies every day of the week.

Closing one properly still needs a final filing. Abandoning it does not.

Where the company genuinely serves a purpose, keep it and run it properly. Where it does not, wind it up cleanly.

What records should you keep?

A bank statement for every account the company holds, a note of each transfer between you and it, and the exchange rate you used. Keep the formation documents and the reference number letter alongside them. That set answers almost every question anyone might raise later.

Keep them for at least six years. The record-keeping obligation carries its own penalty, separate from the filing one.

A simple spreadsheet is enough. Nobody expects accounting software for a company this size.

Does a second owner change anything?

Considerably. Adding a member turns the company into a partnership for American purposes, which means a partnership return, a statement for each member, and possible withholding on amounts allocated to foreign partners. The obligation grows rather than disappearing.

Some people add a spouse hoping to escape this filing. It swaps one requirement for a heavier one. Our guide to Form 5471 categories covers the separate rules for foreign companies owned by Americans.

Decide on the structure for commercial reasons first. Then deal with whatever reporting follows.

Mistakes and penalties we see with Form 5472

The first is assuming no tax means no filing. The two have nothing to do with each other here.

The second is leaving small transactions off Form 5472. A single expense paid from a personal card is reportable, and leaving it out makes the return wrong.

The third is relying on the formation agent. Those companies sell registration and registered agent services, not tax filings.

The fourth is filing the 1120 as though it were a real corporate return. That creates a different problem and invites correspondence.

How US UK Tax Accountants helps

We check whether the company actually needs a Form 5472 at all, obtain the reference number where one is missing, and prepare the annual package. Where years are outstanding, we put together the catch-up filing and the explanation that goes with it.

We also look at whether the structure still earns its keep. Our US federal return service covers the personal side where the company trades in America.

If you own an American company from Britain, get in touch. The cheapest version of this conversation happens before a penalty notice, not after one.

Last reviewed 25 September 2026. This article is general information and not personal tax advice. Every structure turns on its own facts, so take advice on yours before acting.