G8 Summit Fails to Halt Offshore Umbrella Companies

G8 Summit and Offshore Umbrella Companies

So, the G8 summit is over.

Offshore Umbrella Companies and the UK Contractors who use them, breathed a sigh of relief this week. David Cameron failed to get the G8 countries to act in tandem to stop the use of them and to stop multi-nationals paying very little tax, in some countries, like the UK.

The G8 said that countries should put in place their own rules. This is precisely the opposite of what David Cameron wanted. He knows that if he acts unilaterally that multinationals will just up sticks and move elsewhere. That would mean that not only would they not pay Corporation Tax in the UK but they would not hire any more UK workers who pay lots of Income Tax.

Register of Assets Abroad

The G8 did suggest that there should be a register of people who hold assets abroad. However, this is not for general disclosure but only disclosure to the tax authorities. This is nothing new, as the Isle of Man and Jersey and do this anyway. It hasn’t stopped UK Contractors using Offshore Umbrella Companies, previously, and won’t stop them now.

David Cameron has previously said that those who used offshore umbrella companies, although legally right, were morally wrong. That’s rich coming from someone who got his inheritance from the tax avoidance schemes set up by his father Ian.

Labour MP, Margaret Hodge, who is in charge of the Commons Committee looking at tax avoidance, also said it was morally wrong. It was then revealed she ahs a stake in an offshore trust run by her brother. This trust paid less than 2% tax. She has a stake worth millions.

Companies, legally, have to maximise returns for their shareholders. This includes taking advantage of any tax avoidance measures available.