Offshore Schemes legal says top HMRC boss

Offshore Schemes Legal

Offshore Schemes Legal

Are offshore schemes legal? Are the Offshore Umbrella Companies that contractors use legal?

Offshore Schemes can be perfectly legal HMRC’s Commissioner and Director General for Enforcement and Compliance, Jennie Granger, said. According to today’s Times she conceded that “There is nothing illegal about an international structure, especially in a globally integrated economy and these arrangements may be particularly legitimate”.

So, many contractors and freelancers are now aping the bigger companies and even members of Parliament. They are using offshore schemes such as offshore umbrella companies.

Offshore Schemes Legal – Tax Systems of Countries

Jonathan Schwartz, a barrister at Temple Tax Chambers and a professor in international tax law, said “All laws influence and tax laws are no different. The tax behaviour of companies is largely driven by the tax systems they engage with.

“Tax administrators must apply the law as it exists rather than what they, or anyone else, might think it ought to be”.

Offshore Umbrella Companies Legal

That makes a lot of sense. There’s no point in Governments or MPs moaning about companies behaving immorally, when avoiding tax, when they just follow the tax rules created by Governments. It is their laws that make offshore schemes legal.

Usually the companies are just using schemes that the Government created, like special tax dispensation for the film industry, so that they come to the UK rather than go elsewhere.

The UK Government complain about companies avoiding paying tax whilst, at the same time, progressively cutting Corporation Tax. This is with the purpose of undercutting other countries. It is their stated intention to have the lowest Corporation Tax of all the G8 countries.

David Cameron’s Legacy

Then there’s David Cameron whose family money came from his father Ian’s use for himself, and others, of offshore schemes. There’s Chancellor Osborne who has an offshore family trust worth £4.5m.

Then there’s Margaret Hodge herself, the hammer of the multinationals like Google, whom she calls immoral. She has been exposed as owning part of an offshore company.

Stemcor paid her dividends of £50,000 last year. Her stake is worth over a million pounds. Tax was paid at less than 2%. Google would have been appreciative.

Said Mike Dean of Milestone International Tax partners “The companies under fire are doing nothing wrong legally, morally or ethically. They are, in fact, using the tax system in the way intended”.

Therefore, its Government laws that make offshore schemes legal like offshore umbrella companies.

Gain an Advantage

It is Governments who have been trying to ‘cheat’ and gain an advantage on other countries, in certain areas, that has caused this problem. Offshore schemes and offshore umbrella companies are just taking advantage of all of this.

So, it is Governments who make offshore schemes legal.

See our Offshore Umbrella Company Directory

offshore umbrella company list

Offshore Umbrella Company List

Umbrella Company Reviews – Offshore Umbrella Companies

Umbrella Company Reviews for Contractors

Umbrella Company Reviews

Contractors often ask us for Umbrella Company Reviews. We are happy to oblige.

There are two types of Umbrella Company. There are offshore umbrella companies and there are onshore umbrella companies.

The Umbrella Companies HMRC prefer are the onshore umbrella companies. That’s because they get more tax from them.

Tax Avoidance Measures

So, Offshore Umbrella Companies are tax avoidance – but legal tax avoidance. They allow the contractor to keep from 80% to 90% of his, or her, money earned.

Contractors choose an umbrella company or a limited company. The Limited company options returns more to the contractor than the onshore umbrella company. However, offshore umbrella companies return the most.

We have offshore umbrella company lists and onshore umbrella company lists on other pages on this website.

Umbrella Companies Explained

Many of the offshore umbrella companies operate from the Isle of Man.

Onshore Umbrella Companies allow contractors to lay some expenses off against tax. The top umbrella companies are the safe ones.

Contractors can claim travel expenses and overnight expenses against tax as well as a few other things like pension contributions.

Umbrella Company Reviews and recommendations

Umbrella Company Reviews offshore and onshore

Umbrella Company Reviews and Comparisons

With an onshore company you would probably keep about 60% to 65% of the money you earned. With a Limited Company it would be maybe around 75%. With the offshore companies you would keep from 80% to 90%.

There are also companies which operate like the offshore ones but are onshore. They allow contractors to still use their limited companies.

Sometimes, agencies try to steer contractors towards particular umbrella companies. However, the suspicion is that they get commission from doing this. This is illegal under the 2010 Bribery Act – but they still do it.

Working through those offshore umbrella companies is the most lucrative for contractors. Using umbrella companies like that will have returns of up to 90%.

Umbrella Company List

To find some of these offshore umbrella companies, and more umbrella company reviews, you should click on Offshore Umbrella Company List

Contractors who want to find moneymaking opportunities should click on Contractor Moneymaking

Agency Bungs – Major scandal of Umbrella Companies’ agency bungs

Agency Bungs to Umbrella Companies

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