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.