Rangers Tax Case – HMRC accused of bringing them down

Posted on July 10, 2014 by admin

Rangers Tax Case

Rangers Tax Case – a former owner has accused HMRC of bringing a great football club, Glasgow Rangers, down via a spurious tax claim against them.

HMRC demanded more than £46m from Rangers after they used offshore Employee Benefit Trusts (EBTs). HMRC lost the Rangers tax case in a 2-1 verdict at a First Tier Tribunal in November 2012.

So, they decided to appeal it. The judge has now thrown that appeal out too.

EBTs for UK Contractors

HMRC said that Rangers were using EBTs to pay top players salaries. However, the tribunal and then the judge said that the money given to the players were loans.

Now, former owner, David Murray, said that the tax demand was instrumental in Glasgow Rangers being liquidated.

He said that the case hanging over the club caused the market to have a lower perception of the value of the club.

Bought by Craig White

Eventually Craig Whyte bought the club for just £1.

Rangers Tax Case from Rangers football club

He would have to pay the debt of £18m to Lloyd’s Bank as part of the agreement. Unfortunately, he financed that out of future season ticket sales.

As a result of Rangers not making it into the group stages of the Champions League and Rangers season ticket income already being spent, they got into tax and VAT trouble. So, they went into administration and then liquidation.

Rangers Enquiry

Now David Murray wants the Government to start an enquiry over the Rangers Case and how HMRC acted. It seems that Rangers offered HMRC a substantial amount of money to settle the case but turned it down.

Rangers tax case and their defeat could have huge ramifications for HMRC. They were using Rangers as an example.

It’s estimated that there are 5000 other companies using this route, including a number of top English football clubs.

So, a win for HMRC in the Rangers Tax Case could have produced a huge windfall for HMRC.

However, defeat in the Rangers Case has now caused them a lot of trouble amongst football fans and club owners. There will be a backlash against HMRC.

Rangers Supporters Club

According to a Rangers Supporters Club the Rangers tax case has caused a lot of pain to Rangers. They said “Rangers Football Club and its fans have been the victims of a witch-hunt by HMRC. It has done tremendous damage to a proud Scottish institution.

“Why did HMRC continue with this spurious claim when they were offered settlement? We deserve answers as to why this was done to our club”.

It was revealed, last year, that HMRC had come to settlement with many major firms. They were panned for it.

Therefore, the Rangers tax affair could still up a whole can of worms for HMRC. Football fans are not to be trifled with.

For a list of Offshore Umbrella Companies for Contractors click on Offshore Umbrella Companies List

Rangers Update

HMRC appealed the case again and won it. Now Rangers are going to appeal to the Supreme Court.

Crushing HMRC defeat in Rangers offshore tax case

Posted on July 10, 2014 by admin

HMRC Defeat

There was a crushing HMRC defeat in its appeal against Rangers football club’s use of offshore Employee Benefits Trust (EBTs) to pay its players. There was a major HMRC defeat in the original case by 2-1.

HMRC said that these were payments rather than loans. The First Tier Tribunal (FTT) said they were loans. HMRC lost.
The case, and the tax said to be owed, was a major in bringing down Rangers Football Club.

HMRC Appeal

It was a crushing HMRC defeat but they quickly decided to appeal. They have now lost that appeal. The tribunal judge Lord Doherty ruled against HMRC and in favour of Rangers. It confirms that the EBTs and offshore umbrella companies were completely legal.

This HMRC defeat will have major consequences. Tory Grandees, including David Cameron’s father, his father-in-law, Lord Astor, and the Tory Party main sponsor, Lord Ashcroft, have long used these schemes. George Osborne has an offshore family trust.

However, they didn’t like it when this nice scheme spread to the likes of actors, pop artists, footballers and comedians. Nowadays, contractors and freelancers us them. Many of them are in offshore umbrella companies.

Sleep Safely

Now, after this huge HMRC defeat, freelancers and contractors who use offshore umbrella companies can sleep more safely in their beds at night.

A spokesman for Murray International holdings (MIH) which owned Rangers and made the offshore payments to players said:-

“We are pleased with the judgement. It again leaves negligible tax liability. It overwhelmingly supports the views collectively and consistently held by our advisers, legal counsel and MIH itself”.

Rangers were forced into liquidation in 2012 by HMRC.

Rangers Update

HMRC appealed this case again and won. Rangers are now going to appeal that to the Supreme Court.

More Info

For a list of Offshore Umbrella Companies for Contractors click on Offshore Umbrella Companies List

Offshore Umbrella Companies and how they work

Begging Letters Sent Out by HMRC on Offshore Umbrella Companies

Posted on February 13, 2014 by admin

Begging letters from HMRC

As regards Offshore Umbrella Companies HMRC is to continue sending out threatening begging letters to contractors. This is an attempt to get money from them for using offshore schemes that are completely legal.

Said one offshore umbrella company owner “To be honest it’s HMRC scare mongering. They know they can’t legally demand retrospective taxes. However they sent out 30,000 letters in 2013 and will again this year”.

They cannot hope to process that number of contractors, especially when their staff numbers have been cut. However, they are hoping to scare contractors into sending them money.

Tax Avoidance, Not Tax Evasion

Their big problem is that offshore umbrella companies are tax avoidance rather than tax evasion. One is legal and one is illegal.

What HMRC really need to do, if they want all that tax money, is to get the Government to change the laws to make it illegal.

However, despite what they say, the Government have little interest in shutting this down. They are not keen for comedians like Jimmy Carr to use tax avoidance schemes or indeed common or garden contractors.

Legal Tax Avoidance

Most of their donors use tax avoidance. Indeed Cameron’s own money came that way as his father was a setter-up of offshore avoidance schemes and was into it earlier than most people. So, this is where Cameron’s inheritance came from.

George Osborne has an offshore family trust worth around £5m. They probably teach Tax Avoidance at Eton.

Most of the offshore tax avoidance islands around the world are British colonies where the hedge funds ‘reside’.

Isle of Man

Offshore Umbrella Companies for contractors, which are mostly in the Isle of Man, are allowing contractors to do the same as the ‘knobs’ and avoid tax.

As regards offshore umbrella companies HMRC would love this to be changed. However, there is no way that the Tories will annoy their benefactors and sponsors by killing off this golden goose. It is annoying for them that contractors and comedians can’t be kept out.

So, as regards offshore umbrella companies, HMRC just have to send out begging letters to thousands of contractors. They may or may not be using offshore umbrella companies. They hope to can scare them into sending them money.

For a list of Offshore Umbrella Companies you should click Offshore Umbrella Companies List

Offshore Isle of Man Umbrella Companies – Autumn Statement leaves them alone

Posted on December 6, 2013 by admin

Autumn Statement

Offshore Isle of Man Umbrella Companies are in the news due to the Chancellor’s Autumn Statement.

The Chancellor unveiled his new tax avoidance measures yesterday in the autumn statement. He says will net the government £9bn extra in taxes. However, he has made those predictions before and only managed to get a fraction of what he expected to get. Most contractors using offshore Isle of Man Umbrella Companies will not be hit.

There are two areas that the Chancellor is attacking as regards tax avoidance.

Intermediary Companies Legislation

Firstly, the Chancellor is targeting Intermediary Companies.

This is where UK companies register their UK employees as self-employed and pay them through Intermediary companies offshore. This saves the employer paying National Insurance on them.

Several hundred thousand construction workers are ’employed’ this way. It is the companies that get the main benefit. It is not something that affects most contractors in Offshore Umbrella Companies.

False Partnerships Crackdown

Secondly, the Government is going to crack down on what they see as false partnerships, i.e. those set up just to avoid tax. This may affect some Offshore Umbrella Company contractors, if the Isle of Man Umbrella Companies have set them up as partners. However, it is only a small percentage that are set up this way.

All that would happen here is that the offshore Isle of Man Umbrella Company owner would change to a new scheme that is legal and move their contractor over to it.

This legislation is not retrospective so there would be no legacy problems for contractors here. There will be no back payments that HMRC can claim. The very fact that they are changing the law on partnerships means that it was legal before. It will be legal right up to April 2014 when the contractors, presumably, will move to a new legal Offshore Umbrella Company scheme.

Government and HMRC

It would be different if the Government and HMRC fought a scheme through the courts and won. Then the contractors might have problems. However, the Government haven’t won many of these.

If the Government are to get anywhere near the £9bn that they expect to get then they are going to have to get it through the Intermediaries side of it. They may get some from onshore partnerships.

Offshore Isle of Man Companies

However, after this autumn statement those contractors using offshore Isle of Man Umbrella Companies can rest more easily. They weren’t in the Government’s line of fire this time around.

The vast majority of the offshore umbrella company schemes were legal and remain legal under current UK laws. If they do make them illegal, in the future, the legislation will not be retrospective. So, contractors whose schemes are made illegal will not lose out and have to pay back taxes.

For a list of legal Offshore Umbrella Companies you should click on Offshore Umbrella Company List

Applying for Contractor Mortgages

If you want to find out more see Specialist Contractor Mortgages

To apply for one of those specialist contractor mortgages see Contractor Mortgages Application

Disguised Contractors versus Disguised Employees

Posted on November 11, 2013 by admin

Disguised Contractors

We have a new concept of disguised contractors.

The reason that the Government brought in IR35 in 1999 was because they believed that many contractors were just disguised employees. Many companies were laying off permanent workers on the Friday and they were starting in the same job on the Monday as contractors.

This saved the company money in taxation and NI contributions and gave the companies a more flexible workforce. They could lay off these new contractors without redundancy payments when times were tight. They could, maybe, hire them again when things picked up.

It was good for the new contractors, as well. They could offset a lot of things against tax that they couldn’t before. It was a win-win situation. Rather it was a win-win-lose situation with the Government / HMRC / taxpayer as the loser.

Disguised Employees

The Government, and HMRC, quite rightly saw these as disguised employees. It was a scam – a tax avoidance scam.

However, the law that the Government brought in, IR35, caught not only those disguised employee contractors in its nets but tens of thousands of contractors who had been operating, quite legally, as Limited Company contractors for years. It is still catching them in their IR35 nets.

The Government hadn’t meant to in the first place. However, when they saw the extra revenue brought in they decided they quite liked that. When the Conservatives were in opposition they gave winks and nods to the PCG about abolishing IR35.

Looked At IR35 Again

Well, they didn’t actually promise to get rid of IR35 but to ‘look at’ it again. They did look at it and decided to keep it. The main reason was that there was a danger that contractors would get out of Umbrella Companies en masse and start up Limited Companies again.

As there are 200,000 Umbrella Company contractors at the moment and they pay, on average, £10,000 a year more in Tax and NI contributions this would be a loss to the Treasury of £2bn a year. They didn’t fancy that. Surely nobody really believed that they would hand back a load of money to people earning several hundred a day.

Government Prefer Umbrella Companies

The Government appear to want as many contractors as they can to get into Umbrella Companies. Although these contractors are able to claim more expenses than a permanent person could claim, while working through an Umbrella Company, HMRC appear to be happy to allow this to happen. They much prefer dealing with a few hundred Umbrella Companies than a million small Limited Companies.

The Umbrella Companies cream off the contractor’s PAYE tax and NI contributions and sends them on to HMRC each week.

Yes, that’s right, these contractors pay PAYE. They are, as far as HMRC are concerned, permanent employees.

Disguised Contractors v Disguised Employees

So, in getting rid of Disguised Employees they have now created what are, effectively, hundreds of thousands of Disguised Contractors.

The disguised contractors are really contractors but they are dressed up as employees of the Umbrella Companies.

The Umbrella Companies are, in effect, a ruse. They are a device so that contractors, whom IR35 catches, can pretend to be employees of the Umbrella Companies (who don’t produce or make anything) in order to claim some expenses against tax.

You couldn’t make this up!

Waste of Time and Money

Isn’t this all just a waste of time and money?

Couldn’t they just have come up with some solution to stop companies changing employees into contractors in the same job over a weekend? Surely it shouldn’t have been so hard to stop that.

Instead they created the monster IR35 which has created an industry in keeping hundreds of thousands of contractors outside IR35 and hundreds of thousands of contractors ‘dressed up’ as employees.

What a terrible waste of everyone’s time and money!

For a list of legal Offshore Umbrella Companies you should click on Offshore Umbrella Company List

Agency Bungs – Major scandal of Umbrella Companies’ agency bungs

Posted on November 5, 2013 by admin

Agency Bungs

The news is of a major scandal of agency bungs to umbrella companies.

Under the 2010 Bribery Act, Umbrella Companies are not allowed to make payments to Agencies for sending contractors to them. However, we have had it confirmed that this does happen – and it is completely against the law.

Many agencies force contractors to go with a particular umbrella company or to one of several Umbrella Companies that are on their PSL. Often contractors will tell agencies that they want to use their own Umbrella Company and are told point-blank that this is not possible. They say that the contractor must use the one they recommend or one on their PSL.

The agencies are very forceful about this and will seldom back down when the contractor tries to put his or her foot down.

Of course, it may be that they just want to ensure that contractors are working through reputable Umbrella Companies. It could also be because they are getting a bung for each contractor the preferred Umbrella Company gets from them.

Major Scandal of Umbrella Companies

This is a major scandal of umbrella companies and many people know that it is happening. It is an open secret. At some stage the police may decide to raid an agency. One would presume that agencies hide these payments as much as possible. They are not likely to be on the accounts as ‘Agency Bribes’. They will hide them under some other name.

It is completely illegal to induce contractors to choose one Umbrella Company over another in order to get a payment. That payment is not legally a payment but a bribe.

If a contractor is told that they have to use an umbrella company ‘recommended’ by the agency or they cannot start the new contract, the contractor should ask the agency to email them something to say that they are not receiving any money from the particular umbrella company.

Alarm Bells Ringing

If this is not forthcoming then the contractor should have alarm bells going off all over the place. It would be up to the contractor to meekly accept what they are told or insist on having their own umbrella company. They could even threaten to call the police, or financial authorities, if the email saying that they do not receive money from the Umbrella Company is not forthcoming.

That should get their attention if the umbrella companies are taking agency bungs.

Of course, they may find some other candidate is suddenly better to take up the contract. However, they would know that you would call the police. You would have them over a barrel.

For a list of legal Offshore Umbrella Companies you should click on Offshore Umbrella Company List

Offshore Umbrella Companies storm has died down

Posted on July 16, 2013 by admin

Offshore Umbrella Companies Storm

There was an Offshore Umbrella Companies storm a while back. The Times whipped up an offshore umbrella companies storm and the Government decided that they needed to react. The press spouted a lot of hot air. David Cameron even brought it up at the G8 summit.

He did that as he didn’t want Britain to go it alone and give competitive advantage to other countries. After all, Britain is the world’s leading exponent of owning territories which run offshore schemes.

However, the G8 didn’t back Cameron, who was probably only doing it to show the press that he was doing something. The G8’s rejection has let him off the hook. We have since learned that the Conservative Party have received £45m in contributions from hedge schemes many of which operate from offshore addresses.

We then learned that those hedge funds had received a tax break recently worth £145m. A Labour MP was called a ‘stupid woman’ by Foreign Minister William Hague for suggesting that there might be a connection.

Margaret Hodge

We also learned that Labour MP, Margaret Hodge, who is Chairperson of the House of Commons Public Accounts Committee has a share in an offshore company run by her brother call Stemcor. She has called major companies and people who avoid tax as unethical. Her stake is worth millions and the company pays as little tax as the major company tax avoiders.

Not only has David Cameron piped down about it recently but Margaret Hodge has been a little quieter too. He is, no doubt, too busy eating humble pie. There is little point in attacking the major companies for avoiding tax. It is their duty to shareholders to maximise profits.

Umbrella Company Contractors

There’s no point in haranguing contractors for using offshore umbrella companies either. They are just doing the same.

It’s the Government who makes the rules that big companies and contractors take advantage of. However, the Government doesn’t want to change those rules unilaterally.

So, it looks as if the offshore umbrella companies storm has all died down. So, it is business as before for the operators of, and those who use, offshore umbrella companies. It remains tax avoidance and not tax evasion.

For a list of legal Offshore Umbrella Companies see Offshore Umbrella Company List

G8 Summit Fails to Halt Offshore Umbrella Companies

Posted on June 17, 2013 by admin

G8 Summit leaves Offshore Umbrella Companies alone

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.

Rise in Use of Offshore Umbrella Companies

Posted on June 7, 2013 by admin

Rise in Usage of Offshore Umbrella Companies

Rise in Offshore Umbrella Companies

Offshore Umbrella Companies appear to be on the rise. One of the top dogs at HMRC recently said that many offshore schemes were completely legal.

Top people in the Conservative Party have been using these schemes for a long, long time. Indeed David Cameron’s inheritance came to a great extent from the money his father Ian made from setting up offshore schemes for himself and for others.

His father-in-law Lord Astor has many offshore schemes. Indeed the house in Scotland that David Cameron and his wife visit every year is registered in the Bahamas.

The top Tory party donor Lord Ashcroft is another one who operates offshore tax avoidance schemes. He is also the Tory party’s top fundraiser.

Tory Party Leaders

The top dogs in the Tory party have been doing this for years. They are getting on their high horses about multi-national companies joining them in doing this now. They didn’t create these rule for them (nor for comedians like Jimmy Carr) but for the ‘good old boy’ network.

As the head of Google said, it wasn’t Google that created the rules. It was, previous, mainly Conservative governments who created them. Making money moved offshore untaxable was one of the first things the Conservative government brought in when they won the 1979 election.

Now, contractors and freelancers are doing the same and setting up offshore umbrella companies. Of course the Government don’t like it but if they changed the rules it would affect many of their own supporters and donors. They liked it best when it was only the ‘good old boys’ that were able to take advantage of it.

Margaret Hodge Avoiding Tax

Even Labour MP, Margaret Hodge, who has been bashing multi-national companies as immoral for avoiding tax, turned out to be a shareholder in an offshore company that pays less than 2% tax. Her share is worth millions and she got a dividend of £50,000 last year. Everyone is at it now, it seems, except the PAYE workers who now pay most of the tax.

Contractors and freelancers can now get 85% or more of their money returned to them through using offshore umbrella companies. It is very difficult for the Conservatives to change the rules so that contractors and multi-national companies are hit and Tory party donors and members aren’t hit. They don’t want to share this goldmine but they don’t want to lose it either.

This is why more and more contractors are operating through these offshore umbrella companies. Their usage is on the rise. To see a list of these companies click on Offshore Umbrella Company Directory

Margaret Hodge an Offshore Tax Avoider too

Posted on May 23, 2013 by admin

Margaret Hodge

It turns out that Labour MP, Margaret Hodge, is a tax avoider too.

You couldn’t make it up. The newspapers revealed, not long ago, that two senior managers at HMRC were putting their salaries through Limited Companies to save tax. This was whilst they were hunting down genuine contractors who were doing so.

They have now revealed that the Hammer of Google, Facebook, Starbucks etc., Labour MP Margaret Hodge, has a share in an offshore fund as well and is an offshore tax avoider.

The newspapers revealed that Chancellor Osborne is an offshore tax avoider and has an offshore family trust worth £4.5m. They also revealed that David Cameron’s father Ian was an offshore tax avoider He made most of his money (and David Cameron’s inheritance) from offshore funds.

The new revelation is that the Chairperson of the Committee which looks into tax affairs and tax avoidance has a share in an offshore fund. Margaret Hodge is an offshore tax avoider too.

Stemcor Offshore Company

She has a shareholding in Stemcor – which paid just 0.01% tax last year. Google and Amazon would be proud of that. Hodge claimed in a grilling, by Michael Crick, that she just had a small shareholding in the company run by her brother who is an offshore tax avoider.

However it turns out that her shareholding is 1.26% of the company. That would mean that she would have been paid out £56,939 in dividends last year. Her shareholding is now worth £1.8m. That’s hardly a tiny, tiny amount as she claimed.

Stemcor have confirmed that it doesn’t even include shareholdings in her children’s names. It turns out that she owns several million pounds worth of shares when you include her children’s shareholdings. They will now pay no inheritance tax on it.

She was asked to explain what other purpose that there could be other than avoiding tax for her share in the trust? She hadn’t replied so far.

It’s always been the case that those in the know have been using these tax avoidance schemes. It’s to save paying their full whack of taxes.

The top Tories have been offshore tax avoiders for a long time. Now it looks like Labour MPs are at it too. They are using them while bashing multinational companies and genuine contractors who now use offshore umbrella companies.

To see some examples of offshore umbrella companies for contractors see Offshore Umbrella Companies

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