Category Archives: Offshore Umbrella Companies

Offshore Umbrella Companies
Offshore umbrella companies have bcome very popular with contractors in the UK. The offshore umbrella company is now the route favoured by many of them. They can retain 85% to 90% of their income.

It is all perfectly legal.

A typical offshore umbrella company contractor could keep up to 30%, or £30,000 a year more than if he, or she, operated through an onshore PAYE umbrella company.

That can really mount up over the years.

Over 10 years, even if theyhave not invested the money, they would save £300,000 on average on their taxes.

That’s a lot of money to give away to the taxman unnecessarily when they could easily avoid it.

[caption id="attachment_517" align="alignnone" width="225"] Offshore Umbrella Companies used by UK Contractors[/caption]

Offshore Umbrella Companies and how they work

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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 Company Returns

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offshore umbrella company list

Offshore Umbrella Company Returns

So, what are the offshore umbrella company returns on your hard-earned cash compared to other options?

First of all, what are the other options?

Firstly, you can just pay up on your IR35 tax. Secondly you can operate through a Limited Company (or Personal Service Company). Thirdly you can operate through a PAYE Umbrella Company. Finally, you can operate through an offshore umbrella company.

Offshore Umbrella Company

Offshore Umbrella Company Returns can vary anywhere between 85% and 90%, depending on your income. Using offshore umbrella companies are by far the best method of keeping most of your money.

So, if you earned £100,000 you would expect to keep £85,000 to £90,000 of the money you earn.

Limited Company (Personal Service Company)

This is the next best option. However, you would still be £10,000 to £15,000 down than the offshore umbrella company returns. You would expect to keep around 75% of your money. So, you would keep around £75,000 if you earned £100,000.

Onshore Umbrella Company

Using a normal onshore umbrella company would let you keep around 60% of the money you earn. This means you would keep around £60,000 of the £100,000 you earned.

PAYE Operator

If you pay the IR35 tax or use normal PAYE, you would get back around £55,000 of £100,000 that you earned.

There are many reasons for using one or the other. However, if it is a bean count, and you are just going for the most lucrative option then the offshore umbrella company returns of up to £90,000 makes it a no-brainer for contractors.

You could be keeping up to £30,000 a year more by using an offshore umbrella company rather than using a normal onshore umbrella company. That mounts up over time. That money escapes you.

To find out more about offshore umbrella company returns you should click on Offshore Umbrella Company Directory

offshore umbrella company list

Offshore Umbrella Company List

Tory Election Win Good for Offshore Umbrella Companies

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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.

Disguised Contractors versus Disguised Employees

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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

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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

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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

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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

Forced Disclosure for Isle of Man Umbrella Companies

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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.