Monthly Archives: June 2013

G8 Summit Fails to Halt Offshore Umbrella Companies

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G8 Summit leaves Offshore Umbrella Companies alone

G8 Summit and Offshore Umbrella Companies

So, the G8 summit is over.

Offshore Umbrella Companies and the UK Contractors who use them, breathed a sigh of relief this week. David Cameron failed to get the G8 countries to act in tandem to stop the use of them and to stop multi-nationals paying very little tax, in some countries, like the UK.

The G8 said that countries should put in place their own rules. This is precisely the opposite of what David Cameron wanted. He knows that if he acts unilaterally that multinationals will just up sticks and move elsewhere. That would mean that not only would they not pay Corporation Tax in the UK but they would not hire any more UK workers who pay lots of Income Tax.

Register of Assets Abroad

The G8 did suggest that there should be a register of people who hold assets abroad. However, this is not for general disclosure but only disclosure to the tax authorities. This is nothing new, as the Isle of Man and Jersey and do this anyway. It hasn’t stopped UK Contractors using Offshore Umbrella Companies, previously, and won’t stop them now.

David Cameron has previously said that those who used offshore umbrella companies, although legally right, were morally wrong. That’s rich coming from someone who got his inheritance from the tax avoidance schemes set up by his father Ian.

Labour MP, Margaret Hodge, who is in charge of the Commons Committee looking at tax avoidance, also said it was morally wrong. It was then revealed she ahs a stake in an offshore trust run by her brother. This trust paid less than 2% tax. She has a stake worth millions.

Companies, legally, have to maximise returns for their shareholders. This includes taking advantage of any tax avoidance measures available.

Rise in Use of Offshore Umbrella Companies

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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