85% – 90% Limited Company Returns Onshore

Limited Company Returns

Limited Company Returns

British contractors can now get limited company returns of 85% to 90% returns on their income – or even higher. We have one company which offers 92% returns.

Those British contractors who paid the IR35 Tax are the worst off of all contractors as they pay tax as if they were a permanent employee.

Onshore Umbrella Company Contractors

Onshore umbrella company contractors are next worse off. They were able to claim up to 5% of their expenses against tax and so were able to save a little.

However, the Chancellor intends to take away their ability to offset expenses such as travel and subsistence against tax. He intends taking this away in April 2016. He is currently in consultations as to the best way to do this.

British Limited Company Contractors

A bit better off are the standard limited company contractors. It is reckoned that they pay £10,000 a year less tax than umbrella company contractors, on average.

Better still, are offshore umbrella company contractors who can get 84% to 90% returns on their money earned.

They are able to do this because of three British laws which explain, also, why the Government doesn’t stop offshore tax avoidance  :-

Money Sent Offshore Not Taxable

1.  Money sent offshore is not taxable. It used to be but that was one of the first laws that Mrs Thatcher brought in when she won the 1979 election.

Tory Grandees, like Lord Ashcroft, the Tory party’s biggest donor, Ian Cameron, David Cameron’s father, and Lord Astor, his father-in-law, took advantage of this.

They set up schemes that would save them a fortune in tax, and, in Ian Cameron’s case, to allow others to save a fortune in tax.

Loans Not Taxable

2.  The second law that makes this feasible is that loans are not taxable.

So, what happens is that British contractors pay their money to an offshore company who invest it for them.

The scheme pays the contractor the equivalent amount in loans.

Supposedly the contractor will pay the full amount of tax on that money when it comes back onshore. Of course it never does for reason.

Contractor Loans Not Inherited

3.  The third law that makes it feasible is that you don’t inherit loans. The loan debts of one generation do not pass to the next. Your loans die with you. This means that the loans you took out in lieu of your income will eventually pass away with you.

The Conservatives won’t change law as so many of their own make use of this to save themselves a fortune. The big hedge funds, who are such big donors to the Conservative party, would lose out if this was changed.

They won’t change the second law, i.e. they wouldn’t make loans taxable, as this would cause chaos in the banking sector. This is so lucrative worldwide for the UK, which has a dominant position in Europe in it.

They wouldn’t change the 3rd law, either, to pass on one persons loan debts to the next generation.

Can you imagination the outcry that would cause among Tory supporters if they did that?

So, that is why offshore umbrella companies work for British contractors.

Onshore Limited Companies

There is an alternative, now, however.

There are onshore limited company solutions which take advantage of efficient tax planning to give contractors similar returns that they can get from using offshore umbrella companies. However, all of the money stays onshore.

British contractors can get limited company returns in the same 85% to 90% bracket as they would for using offshore umbrella companies. However, all of the money stays onshore and passes through their own limited companies in the UK.

Companies Offering High Limited Company Returns

 Compare the Umbrella Solutions offer British limited company returns of 85% to 90%.

Those solutions have saved British contractors a fortune for years.

Best Umbrella Companies Alternatives for UK Contractors

Best Umbrella Companies Alternatives

Best Umbrella Companies Alternatives

So, what are the best umbrella companies alternatives?

Indeed, what makes a good umbrella company and what are the best alternatives to umbrella companies?

First of all what are the alternatives to umbrella companies.

Well, you could just pay tax as if you are an employee.

Retaining More of Your Money

For a person earning £100,000 a year that would mean that you would retain £55,000 of your hard-earned money and would give the Government £45,000 a year.

Chancellor Osborne would be delighted by that. He, of course, has an offshore family trust from which he benefits.

So, a freelancer using an Umbrella Company keeps £60,000 of his, or her, money earned and would send the Treasury £40,000 a year.

However, from April 1st 2016 much of this gain disappeared as the Chancellor decided that most umbrella company contractors are no longer able to claim travel & subsistence expenses against tax.

Limited Company Alternative

The main alternative to umbrella companies is the limited company – or the personal service company as the Chancellor likes to call it when one person owns it.

Therefore, of the £100,000 a contractor earns, he, or she, keeps £75,000 of that, donating £25,000 a year to the country.

Now, those using tax efficient limited company structures can retain £85,000 of their hard-earned cash.

Most limited company contractors don’t use the most efficient methods of protecting their income from the taxman and these vehicles help them to do so.

So, to find out more click on Limited Companies

Onshore Umbrella Companies

There are also specialist onshore non-PAYE umbrella companies who allow contractors to retain £85,000 a year using different methods.

So to learn more click on Umbrella Companies

Apply for More Information on All Three Options

So, just fill in the form below to get your information pack on how the above three best umbrella companies alternatives work. Click Y against each of those options for which you want to receive the Infopack.

Your Name (required)

Your Email (required)

Your Telephone (required)

Your Daily Rate (required)

Limited Company (Y or N) (required)

Umbrella Company (Y or N) (required)

Comments

85% – 90% Onshore Umbrella Company Alternatives

Onshore Umbrella Company Alternatives

Onshore Umbrella Company Alternatives

It would be worth contractors looking at onshore umbrella company alternatives. These can give let them keep 85% to 90% of the money they earn.

Freelancers usually take the Personal Service Company or PAYE Umbrella Company route if they don’t go with offshore umbrella companies.

Therefore, if they want to stay onshore, there are a number of alternatives to those.

Indeed, there are a number of Umbrella Company Alternatives which are onshore rather than offshore.

They can be as attractive financially as offshore companies – and none of the money goes offshore.

So, they take advantage of tax incentives in the UK.

Limited Company Alternatives

Another alternative is to use a UK-based Tax Planning solution that allows you to continue to use your limited company.

Sometimes, agencies tell contractors that they have to use one of their recommended umbrella companies. They have a  Preferred Supplier List.

There’s a good chance that the agencies are ‘getting a bung’ for doing this or getting some kind of ‘payment in kind’. This is actually illegal under the 2010 Bribery Act.

Agencies and Limited Companies

However, if contractors use one of the Umbrella Company Alternative solutions, which uses a limited company, agencies would not even be aware of it. The contractor would just tell them that they have their own limited company.

Agencies don’t insist that limited company contractors use umbrella companies.

So, here are examples of Umbrella Company Alternatives which use Limited Companies.

They make use of different tax incentives to cut the amount of tax that the contractor pays. All use the contractor’s limited company.

Example of Umbrella Company Alternative

Therefore, you should click on this to find out more information, or to apply, about umbrella company alternatives.

Compare the Umbrella Alternatives

One of these umbrella company alternatives should suit you. Also, they will save you lots of tax.

Furthermore, they use efficient tax planning to save contractors money while still using their limited companies.

Offshore Umbrella Companies and how they work

How They Work - Offshore Umbrella Companies

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

Offshore Umbrella Companies – How Much Money will I keep?

How Much Money

How Much Money Will I Keep

Contractors want to know “How much money will I keep by using offshore umbrella companies?”

Is it worthwhile operating through Offshore Umbrella Companies? How much money will you save a year by operating this way?

Say you are a contractor who is earning just over £400 a day – which is around £100,000 a year.

If you operated PAYE you would probably keep about £64,000 of that.

Offshore Umbrella Companies Viable Alternative

Offshore Umbrella Companies Viable Alternative to PAYE Umbrella Companies and Limited Companies

If you operated through a Limited Company you might keep around £75,000 of that.

If you operated through one of the offshore umbrella companies you would keep something between £85,000 and £90,000 of that depending on how much you earn and your circumstances.

Operating Through Limited Company

So, if you were PAYE you would contribute about £36,000 a year towards the Treasury.

Therefore, if you operated through a Limited Company this loss would be around £25,000 a year.

However, going through one of the offshore umbrella companies you would give up between £10,000 and £15,000 a year. Most freelancers would be towards the lower side at 85% but if they got a really good contract rate they could probably negotiate up towards the higher mark.

It’s probably worthwhile getting a quote from 3 or 4 companies to see what is the best offer. You’ve worked hard enough for it and you might as well keep as much as you can of it.

Government Complaints

The Government complain about it but have no real will to stop it. As the top dog in Google asked, why are they complaining when it is they who created the rules that allowed tax avoidance in the first place?

Legal Tax Avoidance for UK contractors

Legal Tax Avoidance schemes used by UK contractors

It was the Thatcher Government who changed the rules to allow money to go offshore untaxed which gave rise to this tax avoidance in the first place. If they were to abolish it now it would hit many of the Conservative Party donors.

As one of top dogs at HMRC said recently many of these schemes are completely legal. If the Government want to make them illegal they have to change the laws. Until then, offshore Umbrella Companies are legitimate ways for contractors in the UK to avoid tax quite legally.

To see details of these offshore umbrella companies and how much money you would keep see Offshore Umbrella Companies Directory

Umbrella Companies Future – Do They Have One?

Umbrella Companies Future now

Umbrella Companies Future

Contractors are asking, now, about Umbrella Companies future after the Chancellor’s summer budget.

In the budget the Chancellor has taken away the ability of onshore umbrella companies to claim tax relief for contractors on travel and subsistence.

This was the main reason for contractors, inside IR35, to be in PAYE umbrella companies.

IR35 Tax and Contractor Umbrella Companies

Contractor umbrella companies sprung up in 1999 when the IR35 tax came onto the statute book.

Very few contractors actually pay the IR35 tax.

From memory, I think that the Government only collect around £12m a year from it which is a tiny amount. It was not worth creating a tax just for that amount of money.

However, what most contractors, who were inside IR35, did was to go into onshore umbrella companies.

Contractors Inside IR35

They paid more tax than their fellow contractors who were outside IR35 and continued to use limited companies.

However, because of the travel and subsistence expenses that their umbrella companies were able to claim on their behalf, for working away from their main office, they paid less than those contractors who paid their IR35 tax.

Estimates show that umbrella company contractors pay, on average, £10,000 a year more in tax than those who use limited companies. They pay around £20,000 a year more than those who are in offshore umbrella companies.

Estimates show that there are 200,000 UK contractors in umbrella companies. That means that the Chancellor gets £2 billion a year more tax than he used to get if those umbrella company contractors were still in limited companies.

Contractors group, IPSE, claimed that the IR35 tax was a failure because it only brought in £12m a year.

However, they forgot to point out this extra £2 billion a year that the Treasury has been getting from contractors who were inside IR35 but went into an umbrella company instead of paying the IR35 tax.

Travel and Subsistence Tax Relief

Estimates show that they could save around 5% of their income a year on tax relief on travel and subsistence expenses.

So, a contractor on £400 to £450 a day would save around £5,000 a year on tax and relief on travel and subsistence expenses.

So, UK contractors are £10,000 a year worse off in an umbrella company than they would be in a limited company.

However, they would have been £5,000 a year better off than someone paying IR35 or PAYE.

Disguised Contractors

How it works is that umbrella companies disguise contractors as permanent staff. Indeed, they pay PAYE.

However, the umbrella companies passed on the tax relief for travel and subsistence expenses for working away from the umbrella company’s offices at client’s sites.

The Labour Government set up IR35 to stamp out the practice where companies laid off people on a Friday from their permanent jobs and started again as contractors doing the same job.

This was, of course, a ruse to save tax.

The Government saw these ‘contractors’ as disguised employees, which, essentially, they were.

However, the IR35 tax caught more than just those fake contractors it its net. It also caught contractors who had been contracting for years, using limited companies, in its net too.

However, the Labour Government saw the extra money it was pulling in and decided that they didn’t want to ‘fix’ it.

The Tories and UK Contractors

Now, the Conservative Government, who in opposition had pretended to be the ‘friend of contractors’ and who promised to ‘look at’ IR35 again on behalf of contractors if they got elected, have shown themselves to be much worse than New Labour. They were satisfied with the their creation of IR35.

The Conservatives did as they had promised and looked at IR35 again.

However, they decided that, if IR35 was abolished, there was a danger that umbrella company contractors would leave their umbrella companies and start up limited companies again.

Damn right they would have!

Who pays £10,000 a year extra tax when they don’t have to?

The government saw this as a bad thing, though.

It was a no-brainer. Whoever thought that, in times of austerity and Government debt that the Government would hand back £2 billion in tax to people earning a couple of grand a week.

Chancellor Strengthening IR35

However, Chancellor Osborne went even further. He said that he was going to STRENGTHEN IR35 and hired 36 new IR35 Compliance Officers based in Croydon, Edinburgh and Stretford to get more tax from contractors.

The assumption was that it was limited company contractors that he was gunning for.

Umbrella Companies future seemed secure.

Umbrella Company owners fondly imagined that HMRC were in favour of them.

After all, the Government decided to keep IR35 because of the threat of contractors leaving umbrella companies and setting up limited companies.

The Conservative Government must like Umbrella Companies then, right?

Rosy Umbrella Companies Future

Umbrella Companies future seemed rosy.

Umbrella Company owners fondly imagined that HMRC, the Chancellor and the Treasury looked kindly on them.

As one told us “HMRC would rather deal with, and legislate for, a few hundred umbrella companies rather than several hundred thousand contractors”.

The umbrella companies extracted PAYE from their contractors after deducting tax relief on travel and subsistence expenses and sent large cheques, monthly, to HMRC.

If those contractors were in limited companies, HMRC would only get the tax in dribs and drabs and would have to wait till well after their year-end to get it.

Therefore, the Government and HMRC were happy to allow contractors to get that 5% extra in tax relief, weren’t they? Umbrella Company operators saw this as a sop to them.

Onshore Umbrella Companies and Tax Avoidance

They, and their marketing directors, saw offshore umbrella companies as tax avoidance and those who used them as tax avoiders.

They turned their nose up at them.

A part of that was sour grapes, though, as they would have rather have had those contractors themselves.

They saw themselves as on the inside, on the side of right.

It turned out that the Chancellor saw Umbrella companies as tax avoidance too and those contractors who used them as tax avoiders.

How that must have stung!

Disguised Contractors and Tax Avoidance

They were kidding themselves. Whereas IR35 was set up to penalise disguised employees, umbrella companies were setting up disguised contractors, pretending that contractors, who had their own clients, were employees and paying PAYE tax for them.

It was a ruse – a device to avoid tax.

They may not like that but that’s how the Chancellor sees them and their brollies, as the budget showed.

Now, umbrella companies future does not look so rosy.

Umbrella Companies Unique Selling Point

So what is umbrella companies future?

The Chancellor has removed their Unique Selling Point.

Now, umbrella companies future is not rosy. It is hard to see it as a growth industry now.

Will contractors pay a fee to umbrella companies every month just so they will do their admin for them?

The answer is that some might.

With umbrella companies future looking bleak, others will decide that it isn’t worth their while. They may look at changing their working practices and contracts to see if they can operate through limited companies again.

Limited Company Contractors Attacked

However, the Chancellor has attacked limited company contractors too and has taken the travel and subsistence tax relief away from them as well.

He is also taxing their dividends to make it not worthwhile, any more, for limited company contractors to pay themselves in dividends rather than salary.

So what options do UK contractor have now?

What options has the Chancellor left untouched?

What are the umbrella company alternatives?

Offshore Umbrella Companies Option for UK Contractors

Besides limited companies, which are less lucrative for contractors now, there are two main options.

Firstly, there are offshore umbrella companies where contractors can get 85% returns on their money or more.

For more information, or to apply, you should click on Offshore Umbrella Companies List

Tory Election Win Good for Offshore Umbrella Companies

Tory Election Win

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.

David Cameron’s Dad’s Offshore Money – Where Did it Go?

David Cameron's Dad

David Cameron’s Dad’s Offshore Money

What happened to the offshore money built up by David Cameron’s Dad?

One of the first things that Mrs Thatcher did, when she came to office in 1979, was to change the laws so that money leaving the UK was untaxed.

This set off a whole load of offshore money-making schemes for Tory Grandees and party contributors such as Lord Ashcroft, who was the Tory party’s main contributor, and Lord Astor, David Cameron’s father-in-law.

Another of these was David Cameron’s father Ian using his Blairmore vehicle.

Offshore Umbrella Companies for contractors

Offshore Umbrella Companies for contractors to save tax

Ian Cameron – No UK Tax

For 30 years Ian Cameron was setting up offshore schemes that meant his customers would not pay UK tax.

He also invested his own money in tax havens.

In all that 30 years he never paid any UK tax on the offshore money.

You would have thought that he had many millions.

Ian Cameron’s Worth

How much do you think that someone, who had spent 30 years helping people shelter from UK tax, and paying no UK tax for 30 years on his own offshore income, would be worth?

I would have guessed he would be worth many millions, perhaps in the tens of millions and maybe even in the hundreds of millions.

So what did he leave in his will?

David Cameron’s brother got a house out of it. David Cameron, himself, got £300,000 and his sister got some money as well.

That strikes me as being a piffling amount of money for a guy who had been helping others avoid UK tax for 30 years and who had paid no UK tax on his own offshore money for 30 years.

Ian Cameron’s Money

So, what happened to all the money that he must have made?

Paying UK Tax

Paying UK Tax

It’s possible that he gave it to his children to avoid death duty before he died.

It’s also possible that it is still out there in offshore funds in places like Panama, Jersey, the Bahamas etc.

As there is no revelation, no one would ever know.

We only know, because of a firm of lawyers being hacked in Panama, that David Cameron sold shares in an offshore trust in 2010, before he became Prime Minister, for £31,500 – a profit of £19,000.

No Capital Gains Tax on Offshore Profits

Although he paid dividend tax in the income he got from it, he didn’t have to pay any capital gains tax.

It’s now been discovered that there were another couple of companies in which he had shares that were held offshore.

None of this would have been known without the Panama lawyers being hacked.

Downing Street Statement

Downing Street first said that Cameron had “no shares, no offshore trusts, no offshore funds”.

Later this was clarified to: “The prime minister, his wife and their children do not benefit from any offshore funds.”

Later again Downing St said that there were “no offshore funds or trusts the family would benefit from in future.”

That left wiggle room about the past.

Contractor Tax Avoidance sches on Isle of Man

Contractor Tax Avoidance schemes

Where’s the Money?

So, what did happen to all the millions that David Cameron’s dad must have made?

Why did he leave such a relatively small amount of money to his children?

Did he manage to give them it before he died?

Was he spectacularly unsuccessful over 30 years in a field where making heaps of money seems to be easy?

Or are there other offshore trusts out there, in other tax havens, that only David Cameron and his family know how to get hold of?

In recent years UK contractors have been taking advantage of measures, both offshore and onshore, to minimise their taxes, just like David  Cameron’s dad Ian, David Cameron, George Osborne, Lord Ashcroft and Lord Astor.

What’s sauce for the goose is now sauce for the gander.

For an explanation of those tax minimization opportunities for contractors, where they can keep up to 90% of their money, see Onshore and Offshore Umbrella Companies List.

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

Offshore Tax Avoidance

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

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

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

101 Limited Company Structure gives Greater Returns

101 Limited Company Structure

101 Limited Company Structure

The 101 Limited Company Structure allows you to make drawings from your company in the most efficient way in order to save the maximum in tax for UK contractors. It is important to make drawings from your company in a very structured way if you are to save the most money.

The 101 Limited Company Structure means that you can get the best return on the marketplace. It does that by implementing an efficient and safe structure. It is fully compliant with GAAR and also with all current and known future tax legislation changes.

All of the tax planning strategies are fully compliant with UK legislation. This has been ratified by Queens Council opinion, as well as in-house barristers.

Bookkeeping and Accounts

Those operating the 101 Limited Company Structure, do all the accounts including bookkeeping and invoicing, as well as annual returns. They can also advise on investment strategies for contractors in order to maximise their income.

By using a 101 Limited Company Structure you can increase company profits without any increase in sales. In fact, using the 101 Solution is the quickest and easiest way of raising company profits.

Most contractors, without realising it, operate in a very tax inefficient way. As a result, they pay far more to the taxman than they need to do. The 101 Limited Company Structure will help change this.

Inefficient UK Contractors Wasting Money

UK contractors tend to act in a very tax inefficient way and this holds back both their businesses and their profitability. It means they have to work for more years than they need to.

One company has been operating the 101 Limited Company Solution for contractors for 9 years now. So, they know what they are doing. They have helped many contractors this way.

To find out more, just click on 101 Limited Company Structure Solution or to apply just click on 101 Limited Company Solution

offshore umbrella company list

Offshore Umbrella Company List

Begging Letters Sent Out by HMRC on Offshore Umbrella Companies

Begging Letters from HMRC to UK Contractors

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

Disguised Contractors versus Disguised Employees

Disguised Contractors

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

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

Offshore Umbrella Companies storm has died down

Offshore Umbrella Companies Storm

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

Rise in Use of Offshore Umbrella Companies

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

General Anti Avoidance Rules (GAAR) will not catch multinationals

General Anti Avoidance Rules offshore

General Anti Avoidance Rules (GAAR)

There is a common misperception that the new General Anti Avoidance Rules (GAAR) will force companies like Google, Facebook and Starbucks to pay more UK tax. It will do no such thing and it is not even aimed at them.

Playing Field

The problem that the UK Government has in this area is that it doesn’t control the playing field. Other countries can use whatever rate of Corporation tax that they like and the UK cannot do anything about it. They can’t tell Ireland, Luxembourg and Switzerland what Corporation Tax to set.

Maybe the EU could but remember that the EU has a common VAT rate – but Britain has a different one. This would certainly be brought up if Britain tried to introduce a standard rate of corporation tax across the EU.

Switzerland is not even in the EU anyway and neither are the Bahamas, Bermuda etc.

Loading Up Costs

In terms of General Anti Avoidance Rules (GAAR), it’s also up to companies in which countries they load up costs and in which countries they have low costs and high profits.

General Anti Avoidance Rules

General Anti Avoidance Rules affecting UK contractors

Those countries with low corporation tax rates lose out as the companies incur fewer costs there like opening factories or hiring people.

Those with higher rates of tax will ge the benefit of the companies loading up costs by running their operations there. Those countries will earn income tax and have fewer people claiming unemployment benefit.

Dice Loaded

It’s swings and roundabouts. Cameron is trying to load the dice so that the UK can get both jobs and the corporation tax. However, he can’t bring in many measures to do so. He would have to get international cooperation and that will prove very difficult to do with low tax countries like Ireland saying that their corporation tax rate of 12.5% was not negotiable even when they were being forced into a bailout.

Any multinational agreement on all of this is a long way off, if it happens at all. Why should countries not compete on tax rates as well as on everything else. Surely that’s the free market. Surely a Conservative would understand that. Why do they want or need General Anti Avoidance rules (GAAR)?

Offshore Umbrella Companies Boosted by UK Government

Offshore Umbrella Companies Boosted

Offshore Umbrella Companies Boosted

We have now got offshore umbrella companies boosted by the UK Government.

The UK Government is inadvertently boosting them by their attacks on freelancers’ use of Personal Service Companies. The UK Government appear to want freelancers to get out of Limited Companies and get into Umbrella Companies. The UK Government can then grab more income tax and National Insurance Contributions from them.

Although, to a certain extent they are managing to do this, more and more fish are escaping their nets and slipping into the offshore umbrella companies net. This means that the Government will get very little tax at all from them if any.

Legal Offshore Companies

Most of these schemes are completely legal. The freelancers’ money goes to the offshore umbrella company as an investment. They get back a loan in lieu of the investment. They use the investment as collateral.

One such scheme has the freelancer’s money paid as an investment. This is then invested in a broad spread of 150 telecoms companies. They insure the investment against loss. Therefore, as they insure the investment against loss the offshore umbrella company is able to loan money to the contractor in lieu of that investment.

When the contractor wants to cash in the investment he, or she, will get any profit from the investment in the telecoms companies. All they will pay is Capital Gains Tax on any profit they have made.

Conservative Party

Of course, this is all completely legal. The Conservative Government knows that as it was they, under Margaret Thatcher, who legalised it in 1979 within a month of coming to office. Perhaps it was payback time for their sponsors.

A number of Tory Grandees have used it successfully. They include David Cameron’s father Ian, Lord Astor his father-in-law, Lord Ashcroft the Conservative Party’s main donor and fundraiser. Of course, the Chancellor himself, George Osborne has a family trust of £4.5m offshore.

IT Contractors

Of course, these schemes were never meant for the likes of IT Contractors and other freelancers. However, they cannot just exclude IT Contractor from this tax avoidance gravy train. If they stopped it they would be cutting off their noses to spite their faces.

So, contractors are happy to see offshore umbrella companies boosted by the Government.

Check out our Which Umbrella Company guide and our Which Contractor Accountant guide.

Offshore Schemes have Government foaming at mouth

Offshore Schemes for contractors

Offshore Schemes

The Government has fulminated about offshore schemes where big companies are able to avoid paying tax in the UK. David Cameron has criticised ‘clever accountants’ who set up these offshore schemes for their clients to avoid paying UK tax.

Margaret Hodge of the Public Accounts Committee has attacked the big Accountancy companies for setting up these schemes at a Public Enquiry.

However, one wonders who should be in front of this Public Enquiry, the big Accountancy companies or the Government. After all, it is the Government who are in charge of the law. The big Accountancy companies just follow the laws that the Government set up.

Offshore Schemes for UK contractors to save tax

Offshore Schemes for UK contractors to save tax

Thatcher Government

Perhaps the Committee should investigate members of the Thatcher Government. The Committee could ask them why one of the first pieces of legislation they put through in 1979 after being elected was to allow people to send money offshore without it being taxed. Why was that so urgent?

There’s a lot of talk also about trying to shame companies like Starbucks into paying more tax than they legally have to.

Perhaps they should put David Cameron in front of the Committee to ask him if he would hand over to HMRC a big chunk of his own inheritance which came from the offshore schemes set up by his father Ian, who was one of the early practitioners of such schemes.

George Osborne

Perhaps they can bring Chancellor George Osborne before the Committee. They could ask him if he would promise to that he and his family will pay not just the tax that they have to but the amount of tax that they would have had to do if their £4.5m family trust has been set up in the UK rather than set up offshore.

Contractor Tax Avoidance sches on Isle of Man

Contractor Tax Avoidance schemes

So, the problem for the Government is that these offshore schemes are mainly used by their supporters and backers. There’s not a huge amount of Labour backers with offshore trusts.

These offshore schemes are used by people like David Cameron’s father-in-law Lord Astor and the Conservative Party’s main sponsor and fundraiser Lord Ashcroft. However, it was Margaret Thatcher’s Conservative Government who brought in the laws allowing people to send money offshore untaxed.

Multinational Companies

What they don’t appear to like is multinational companies getting a slice of what was set up just for the upper and business classes in Britain to avoid paying UK Tax. The upper and business classes in Britain have been taking advantage of this for more than 40 years. However, they are now outraged that companies like Starbucks, IBM, Google and Microsoft are using them.

What really annoys them is that freelancers, many of them in IT, are using offshore schemes to avoid UK tax. IT Contractors mainly come from the middle and working classes. They didn’t set these laws up for them.  So, will Cameron and Osborne change the laws which have helped their supporters and sponsors for many, many years – or is this just a knee jerk reaction to a media frenzy.

We shall see. For the moment these offshore schemes remain perfectly legal.

Facebook avoiding UK Tax

Facebook

Facebook

Facebook are the latest company caught avoiding UK Tax. They made £840m in profits last year. However, they paid just £2.9m in tax – all of it in Ireland. Although they only hire 287 staff in Ireland all, of the advertising outside the USA they book to Facebook Ireland.

They book the profit to Ireland. However, they then move that money out of Ireland to the Cayman Islands and its Californian parent. The technique is called Double Irish. They charge the Irish company royalties for using the Facebook brand in much the same as Starbucks do. They moved £750m that way.

Advertising Revenues

Facebook then reported a loss of £15m loss in Ireland despite all the advertising revenues outside the US ending up there. This is even though 44% of Facebook’s revenues come into Ireland.

At least they gave Ireland £2.9m. They gave the UK just £238,000 in Corporation tax. Facebook say that they comply with all UK laws – and of course they do. They just know how to work the system.

It said that it picked Ireland as its European base because it was the “best location to hire staff with the right skills to run a multilingual hi-tech operation serving the whole of Europe”.

The low Corporation Tax of 12.5% and the ability to do be able to do a Double Irish, it seems, played no part in the decision to go there. Of course, Ireland didn’t get any great benefits from Facebook in terms of Company Tax. Although Facebook’s Irish staff pay income tax there.

UK Tax Avoidance

The Chancellor George Osborne has promised to do something about it. However, it will be difficult and he risks major companies pulling out of the UK. He is going to target high income earners in the UK who hide money overseas.

However, most of the schemes are completely legal. Neither the individuals or companies, like Facebook, are breaking any laws. It is legal tax avoidance rather than illegal tax evasion.

The big problem is with companies who charge other companies within the group royalty payments for using the brand name. They are perfectly entitled to do so. They are perfectly entitled to charge them anything they want for the use of it too.

Perhaps that is one area where the UK can legislate, i.e. to limit the amount that they can charge for using the brand name. Of course, those companies will then look for other costs that they can load up in the locations where they want to load up costs.

Forced Disclosure for Isle of Man Umbrella Companies

Forced Disclosure

Forced Disclosure

Forced disclosure is the latest Government tool against tax evasion.

The Government has just announced a new deal with the Isle of Man where the island will give the Government the names of UK citizens with offshore bank accounts. Forced disclosure is the latest in their war against tax avoiders. This has been whipped up by the media in the UK. Similar deals with Jersey and Guernsey are expected soon.

Said Danny Alexander, Chief Secretary to the Treasury, in an interview with The Times “Any jurisdiction that refuses to enter into one of these information disclosure agreements is taking a huge risk with their reputation. It’s the price of doing business”.

So, it looks as if the Isle of Man agreed voluntarily to a certain extent. Said Alexander “Every tax jurisdiction that once thought it could operate on the basis that it could be an offshore haven needs to think again. Everyone should pay their proper amount of tax.”

Isle of Man

The Isle of Man’s Chief Minister said “This decision is a well-considered next step in the island’s long-established policy of commitment to being at the forefront of tax transparency and international co-operation. It is logical for the Isle of Man to embrace new forms of tax co-operation with our largest trading partner, the UK”. So there you ar then.

So, what does that mean for contractors who are operating under offshore umbrella companies schemes there? Does forced disclosure mean that the game is up for them? Will those offshore umbrella companies have to shut down now?

Government Frustration

Far from it. Forced disclosure is more to do with tax evaders than tax avoiders. The Government’s frustration is because most of these schemes are legal under the laws of the UK. Therefore, it would be very hard for the Government to shut them down. Most of the companies in the Isle of Man already disclose this information anyway. They have nothing to hide if they are acting legally and the schemes are legal.

Government Frustration

As the Government can do little about it, what they are trying to do now, in frustration, is to scare contractors out of the offshore umbrella companies. They are doing this by forcing the Isle of Man to bring in disclosure rules to hand that information over to the UK Government. However, once the Government has that information they can’t use it to prosecute people who are operating within the law.