Offshore Schemes legal says top HMRC boss

Posted on June 27, 2016 by admin

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 Benefits

Posted on June 23, 2016 by admin

Offshore Umbrella Company Benefits

Benefits – so what are the offshore umbrella company benefits?

The main benefits are all connected to the money. This is the best way for contractors to keep most of their money. They can keep anywhere between 84% and 90% of their hard-earned money.

The exact amount depends on how much they are earning.

Mrs Thatcher Changed the Loan laws

Offshore Umbrella Companies started up when Mrs Thatcher changed the laws so that money sent offshore was no longer taxable. It was one of the first laws she brought in when she became Prime Minister in 1979. The Tory party grandees were among the first to get the benefits.

One of the earliest to benefit was David Cameron’s father Ian. He quickly saw the benefits and set up lots of offshore schemes. Indeed he made his money that way. That’s where David Cameron’s inheritance came from.

Many of the Tory grandees saw the benefits and operate schemes like these including Lord Astor, David Cameron’s father-in-law and Lord Ashcroft, the Tory party’s main donor.

How Loans Works

So, the money that is sent offshore stays offshore. The Offshore umbrella company loans the contractor money in lieu of that loan. The loan is never paid back. The contractor defaults on that. The Offshore Umbrella Company takes the money in lieu of that.

Money is not taxed until it comes back onshore. The money never does. It is different money. Loans aren’t taxable. This is how it all works. It’s how the contractor benefits.

Tax Avoidance

It is tax avoidance, of course. However, it is legal and it is not tax evasion which is illegal.

The Government complain about it. However, it is they who make the rules. It is they who can change them. Contractors and others are only taking advantage of the rules as they are. They take the benefits from the Governments own laws.

Indeed it is the legal duty of the directors of a company to maximise the returns for shareholders.

Of course, the Government don’t want to change the rules as it benefits many of their party sponsors. Indeed George Osborne has a Â£4.5m family offshore trust. He sees the benefits of it.

Benefits Not Intended

It’s annoying for the Government when newspapers reveal that comedians and rock stars are reaping these offshore umbrella company benefits.

The benefits weren’t intended for the likes of them and contractors. The Government had to react. However, they don’t change the law.

For some examples of these companies see Offshore Umbrella Company List

Offshore Umbrella Company List

Offshore Umbrella Companies and how they work

Posted on April 14, 2016 by admin

How They Work

Contractors want to know how they work.

Offshore Umbrella Companies normally operate through loans. In 1979 the Thatcher government, in one of its very first bills, allowed money to go offshore untaxed. It doesn’t get taxed till it comes back onshore, if ever.

This opened the way for offshore schemes and offshore umbrella companies which operate in places like the Isle of Man, Jersey, the Bahamas, Bermuda etc.

Indeed most of the world’s hedge funds operate from one of the UK’s offshore islands.

How they work is that money held offshore is not taxed unless it returns to the UK. Among the first to take advantage of this were the Tory Party grandees.

David Cameron’s father made his money this way by setting up schemes both for himself and others. David Cameron’s inheritance came mostly from money earned this way. Another to benefit is Chancellor Osborne who has £4.5m held offshore in a family trust.

Tory Party’s Money

Much of the Tory party’s money comes from people who operate these schemes. Lord Ashcroft, the top donor and fundraiser for the Conservative Party operates these offshore schemes. Now contractors and freelancers are enjoying the benefits of it too.

How they work is that most of the offshore umbrella companies and offshore schemes operate through loans. Because they’ve sent money offshore untaxed, i.e. the money they earn, that money is not taxable till they bring it back onshore. However, it never does.

Because they have that money offshore, the offshore umbrella companies that they operate through will loan them money back in lieu of that. They will then take that money back at the end to pay back that loan. Money loaned is not taxable.

Different Money Comes Back Onshore

Basically it is different money that comes back onshore than the money sent off. How they work is that he contractor receives loans and never pays them back as the offshore umbrella companies take the money sent offshore in lieu of those loans.

This is all completely legal. There is nothing HMRC can do about it as it is all framed in UK law. They would have to change the law to stop it and that is fraught with difficulties and would hit the Tory Grandees who basically pay for the Conservative Party.

Very Neat Scheme

There is one other scheme, which is quite neat, which one offshore umbrella company operates. They basically invest your money in a whole range of safe companies and send you loans in lieu of that money. You may even make a profit when you eventually quit the scheme and the only tax you would pay would be capital gains tax on the profits.

The beauty of it is that you can operate this through your own limited company and it would be invisible to your agency. See details of it here – Offshore Scheme using your Limited Company

To see details of these offshore umbrella companies see Offshore Umbrella Companies Directory

Tory Election Win Good for Offshore Umbrella Companies

Posted on May 25, 2015 by admin

Tory Election Win

Whoever you voted for, it has to be said that those who run, or use, offshore umbrella companies will be pleased at the Tory Election Win.

Labour had been threatening all sorts of things as regards offshore tax havens.Of course, this would have affected offshore umbrella companies.

Although David Cameron and George Osborne have also been threatening to do all sorts of things to people who use offshore tax havens. However, the press has usually prompted this after some new tax avoidance ‘scandal’.

Offshore Umbrella Companies

As we all know, it is the Government that sets the rules, including the tax rules. Companies are legally bound to maximise profits for their shareholders.

If that includes taking advantage of Government rules and schemes that is the right thing to do for their shareholders.

It might not be the right thing to do as far as the British taxpayer is concerned. However, it is the British Government who are elected to look after the rights of their taxpayers. Companies are put in place to look after the interests of their shareholders.

Governments shouldn’t complain if companies use offshore means to so this. After all they are only following Government rules. If the Government don’t like those rules they should change them. The Tory election win will delight the hedge funds.

Offshore Tax Havens

The astonishing fact is that half of the world’s trade goes through these offshore tax havens. Also, one-third of all the world’s wealth resides in these offshore tax havens.

When we tell you that most of these offshore tax havens are British owned or British Dependencies you see the real reason that Britain, and the Tories, don’t want to do anything about them. They will do as little as the press will allow them.

One of the first laws that Mrs Thatcher pushed through, when she came to office in 1979, was a law that meant that money moved out of the UK was no longer taxed.

That opened up the floodgates.

Don’t expect the Tory election win to change things too much.

Ian Cameron and Offshore Tax Schemes

David Cameron’s father, Ian, was one of the first to set up offshore schemes for people and companies. Indeed, David Cameron’s inheritance came from profits from these offshore schemes.

What about George Osborne?

He had to admit that he had a family trust offshore worth £4.5m. He said that, when the money comes back onshore, the right amount of tax will be paid.

It never will.

Loans in Lieu of Income

What happens is that people send their ‘income’ offshore and are given loans in lieu of it. They never pay the loans back. Loans are not retrievable after death. Eventually when the person dies, the loan disappears along with the obligation to pay it.

It was the wealthy hedge funds and rich individuals who use offshore schemes who bankrolled the Tory election win. Most of them have offshore addresses in British Dependency tax shelters,

He who pays the piper calls the tune. They wouldn’t expect to be punished for it after the Tory election win.

Offshore Schemes

The Conservative Party’s main fund organiser and donor, Lord Ashcroft, takes advantage of offshore schemes.

David Cameron spends much of his holiday time at Lord Astor’s, his father-in-law, estate in Scotland. This is owned from The Bahamas.

Of course, it does annoy them all when common or garden folk, like Contractors, use schemes like offshore umbrella companies.

Tax Avoidance Schemes

These tax avoidance schemes were not set up for ordinary folk to take advantage of.

However, there’s not much they can do about it as contractors are just following the rules set up by successive Tory Governments and taking advantage of them. They are just doing the same as the toffs and hedge funds after the Tory election win.

These offshore umbrella companies mean that UK contractors can keep 85% or more of their hard-earned money – and it is all perfectly legal.Cclick on Offshore Umbrella Company Directory to find out more information about offshore umbrella companies, or to apply to join one.

Offshore Tax Avoidance – Why the Government doesn’t Stop it

Posted on April 8, 2015 by admin

Offshore Tax Avoidance

Many people, including contractors are bemused by the fact that the Government doesn’t just stop Offshore Tax Avoidance schemes completely.

“Why don’t they just shut them all down?” they ask. Why don’t they just get in touch with the people and say “You owe us a whole load of tax?”

The answer is that they can’t.

Don’t Break UK Tax Law

Top Umbrella Companies offshore and onshore

Top Umbrella Companies for returns

They don’t break UK laws. Indeed the offshore umbrella company schemes are designed to fit in with UK law. It may not be in a way that the Government intended, or wanted, but they do comply with UK tax law.

That’s why it is legal tax avoidance rather than tax evasion.

According to HMRC’s Commissioner and Director General for Enforcement and Compliance, Jennie Granger, “There is nothing illegal about an international structure, especially in a globally integrated economy and these arrangements may be particularly legitimate”.

Legal Tax Avoidance

International tax law expert, barrister Jonathan Schwartz 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”.

That’s exactly correct. Those who run offshore tax avoidance schemes design their solutions to fit in with current UK law.

Change Tax Laws Back

Of course, the Government could change the laws back to where they were before – but they don’t want to do that.

They make those laws for a purpose. They may want to bring more film companies to Britain or to support the burgeoning UK music industry. They give tax incentives for film makers or music producers to operate from the UK.

Offshore Schemes for UK contractors to save tax

It does do that – but it also opens the door to those who want to use this for tax avoidance.

Offshore Umbrella Company Loans

Then there is the fact that, in many offshore tax avoidance schemes like offshore umbrella companies, the money is sent offshore untaxed and stays there.

The offshore company gives the contractor a loan in lieu of the money.

That loan money is never paid back so the offshore company keeps the money sent offshore in lieu of it.

So, what should the Government do about it? Make loans taxable?

Think what would happen to the banking system then or to the City of London and all the commerce that goes on there.

Upholding the UK Tax Laws

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

The courts must do that also. It’s Government that makes the laws. It’s the duty of the courts to apply those laws.

The Government may fulminate against offshore tax avoidance but it is they who create the laws that allow it.

Money Leaving UK Untaxed

One of the first things that Mrs Thatcher did when she came to power was to bring in a law that allowed money to leave the UK untaxed.

Many Tory grandees have taken advantage of this to send their money offshore untaxed. This includes David Cameron’s father Ian, his father-in-law Lord Astor and the Tory party’s main funder, Lord Ashcroft.

Paying UK Tax

It also includes Chancellor, George Osborne, who has a £4.5 trust offshore. He says he will pay the appropriate tax when it comes back onshore. However, it never will. It was sent offshore in the first place to avoid UK tax.

Margaret Hodge and Stemcor Tax Avoider

The hammer of the offshore companies, and big companies who avoid UK tax, is Margaret Hodge, a Labour party MP who is in charge of the Public Accounts Committee in Westminster.

However, it was revealed that she owns part of an offshore company called Stemcor, which her brother runs, and that her stake is worth a million and saved her 50 grand in tax annually.

Of course, the Government could reverse Margaret Thatcher’s tax law and make money that leaves the UK taxable.

What would that do for British business and the City of London, and the Tory grandees, income streams?

Offshore Tax Avoidance Schemes to Continue

So, the Government may fulminate against offshore tax avoidance schemes every time they are ‘exposed’ in the press. They have to do that.

What they are not going to do is make money that goes offshore taxable again or to make loans subject to tax.

So, offshore tax avoidance will continue as long as the laws of the land allow it – and courts will continue to rule that loans are not taxable.

For a list of hose companies who operate offshore (and onshore) tax avoidance schemes click on Offshore Umbrella Companies List

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