Chancellor Osborne’s Spending Review last week didn’t touch offshore umbrella companies spending review. Indeed he has decided to cut HMRC’s budget by 5%.
He said in the Autumn Statement late last year that HMRC’s Budget would remain untouched. However, he has obviously changed his mind.
It doesn’t make much sense to cut the Budget of the department that brings in all your revenue. This will delight those who run and those who use Offshore Umbrella Companies, though.
Tackling Tax Evasion
The Chancellor did say that he would allocate extra resources to tackle tax evasion. However, was undecided on what that would be. He has set HMRC a target to bring in an extra billion pounds from that.
More and more contractors are using he Offshore Umbrella Company as a means of tax avoidance (rather than tax evasion). The can retain 84% or more of the money they earn by using them.
Of course, the Chancellor and Prime Minister would like to stop this but other than call it unethical and immoral, there’s not much they can do other. The only way would be by changing the laws in ways that they would prefer no to do. As we have shown in previous articles, it’s not just contractors (or comedians) who are using these schemes but MPs too.
David Cameron’s Inheritance
We showed that David Cameron’s inheritance came mainly from the money his father Ian made from offshore schemes. We showed how the Chancellor has an offshore family trust worth £4.5m. We also showed how hammer of the tax avoiders, Labour MP Margaret Hodge, is a user of offshore schemes herself. She has a stake in an offshore company worth millions.
The offshore umbrella company sprung up when the Conservative Government of Mrs. Thatcher changed the law to allow money to leave the country untaxed. It’s been used to avoid tax by many of the top Conservative Party donors as well as the MPs themselves. So, they are hardly likely to try very hard to stop it.
For a list of these Offshore Umbrella Companies see Offshore Umbrella Companies List Continue reading