Elite Tax Haven Details Leaked

[RacerMDR]

the schemes are very often legal when they start.......it's a loophole. It isn't' illegal.

HMRC spot it - don't like it, try and close it...........fair play.

It isn't illegal until the rules are clarified, laws are changed and that's only IF they spot it.

It's equivalent of changing the speed limit on a stretch of motorway to 50mph........and everyone that was doing 70mph on camera is now in trouble. Clearly that doesn't fly with the law (although HMRC try)

So we all start doing 50mph - no problem.

Don't know what all the fuss is about.

If someone doesn't like it because it's morally questionable..........nobody cares. I think smoking is morally questionable.........but it isn't illegal - so people crack on and i'll just not be near them when they do it.

[AW111]

andy_s said:

You seem very emotional about the subject; it's been explained on here about the varying degrees of 'getting out of tax', legality and illegality, differences between 'schemes' and legitimate mechanisms employed by any large company operating globally and investment funds operating world-wide to secure our pension, but no one as far as I can see has been extolling the virtues of the various vehicles to do this when used in an illegal way, no one has said there is a crushing burden of tax and no one has been an apologist in regards to illegal scams.

So if this particular scheme is legal, you are all for it?

[anonymous-user]

AW111 said:

Here's a cracker of a scheme : give your money away to a company in Mauritius, then advise them where to invest it - like the house you then live in, the cars you drive, the art on your walls, your wine "collection" etc. Even your personal shopper.

https://www.bbc.co.uk/news/amp/uk-41893764

I'm sure the apologists here will be queuing up to tell us it's all fine and dandy and a legitimate way to avoid the crushing burden of unfair taxes in 3, 2, 1...
But it sure smells fishy to me.

I don't get it. We don't have wealth taxes so what does hiding your wealth achieve? Unless you evade income taxes in the first place you achieve nothing by subsequently moving your money offshore and if that's your game then the offshore structure is irrelevant to the evasion which occurred onshore. I suppose by owning nothing you can't be sued?

[RacerMDR]

AW111 said:

So if this particular scheme is legal, you are all for it?

I know you didn't ask me - but I am 100% for paying as little tax as the system allows. In all cases.

As they pull our eyes out in so many ways.

As long as it's legal - no problem.

[andy_s]

AW111 said:

andy_s said:

You seem very emotional about the subject; it's been explained on here about the varying degrees of 'getting out of tax', legality and illegality, differences between 'schemes' and legitimate mechanisms employed by any large company operating globally and investment funds operating world-wide to secure our pension, but no one as far as I can see has been extolling the virtues of the various vehicles to do this when used in an illegal way, no one has said there is a crushing burden of tax and no one has been an apologist in regards to illegal scams.

So if this particular scheme is legal, you are all for it?

Bit of a binary question, but personally - not particularly; but I wouldn't blame the people concerned, I'd blame the system or understand that the in this particular convoluted scenario which probably doesn't stack up to a hill of beans it's impossible to legislate against it. Then I'd become an actor, move to Ireland and open my Mauritius account...

[Again, I'm presuming we're talking of the Mrs Brown scenario?]

[Mrr T]

fblm said:

It seems to me that the most egregious 'avoidance' schemes and structures use trusts to, AIUI, dissociate the assets from their owners/beneficiaries. In a few cases, like say caring for disabled children I get it but otherwise I'm struggling to see why they are accepted as legitimate structures. Can anyone explain why they are so widely tolerated/considered legit?

Besides the obvious use with parents/children you mention. In many jurisdictions the trust structure is the only way to securely structure unitised investment schemes. There are others available, for example UCITS in the EU, but many countries do not. For examples in Singapore and HK all unitised investment schemes are still trusts.

Edited by Mrr T on Friday 10th November 14:35

[Tony33]

RacerMDR said:

AW111 said:

So if this particular scheme is legal, you are all for it?

I know you didn't ask me - but I am 100% for paying as little tax as the system allows. In all cases.

As they pull our eyes out in so many ways.

As long as it's legal - no problem.

Now someone will probably prove me wrong and say anyone can do it who pays tax but the impression I get is these schemes are only viable to the very rich as the entry fees are so expensive. Tales of people paying nearly £1 million to advisors for whom the net gains are very well worth it.

So there seems a threshold of earnings at which avoidance becomes more possible. I think this is the bit that seems most unfair.

[AW111]

RacerMDR said:

I know you didn't ask me - but I am 100% for paying as little tax as the system allows. In all cases.

As they pull our eyes out in so many ways.

As long as it's legal - no problem.

I have a different view - I happily claim legitimate deductions, but avoid contrived situations like that, even if legal (for now). I have ditched a previous accountant over his insistence that I should be claiming things that I felt were morally wrong although technically legal.
Would I like to pay less tax? Of course. But I also appreciate that society can't function without it.

[anonymous-user]

fblm said:

Roman Rhodes said:

Much misunderstanding around the subject of trusts. A standard UK discretionary trust of the sort you describe will pay 45% tax on all income and normal capital gains and dividend tax.

They appear to be more for IHT avoidance no? But it was the Mauritius trusts that really raise a suspicious eyebrow. I'm not sure why they are tolerated. I understand the very good reasons for legitimate businesses, like investment funds, being structured in transparent tax neutral jurisdictions, not so much trusts in secretive backwaters.

You'll have an immediate IHT liability if you put in more than the nil rate band - plus up to 6% tax every 10 years on the amount over the nil rate band. UK trusts don't really 'dodge' or avoid tax - they are more about keeping control of money and assets for the beneficiaries. I think the Mauritius vehicles were companies rather than trusts - and would appear to be 'well dodgy' in the way they were used (based on the scant facts in the media!).

[oyster]

James_B said:

steviegunn said:

If you have little or no income, how do you pay income tax?

The poor don't pay much inheritance tax because they don't inherit anything.

The poor don't pay much stamp duty because they can't afford to buy a house.

The poor don't pay much tax because they are poor.

Income tax is only 25% of UK revenue (source - https://www.ifs.org.uk/publications/9178 ) so I wonder what percentage of the other 75% of revenue is directly or indirectly supplied by the 50% of households who are taking out more than they pay in in income tax? There is some information but I suspect the burden especially from VAT makes the 50% bigger contributors to that lump than the 1%.

Edited by steviegunn on Thursday 9th November 22:52

Taking out more than they pay in total tax, not in income tax. I posted the ONS data up,the other day showing how redistributive our tax system is overall.

So your suspicions are wrong, most households are net recipients, they take more out than they pay in.

This myth that the lower paid are paying too much just isn’t true, the burden is at the other end of the scale.

Define burden.

[Halb]

Guvernator said:

Aren't we looking at this a bit backwards. We are arguing about who should pay more and fair share etc but why do we have such a large tax burden in the first place? Over my lifetime the tax burden has just got bigger and bigger. If making people pay more is unpalatable surely the alternative is to spend less. I know the Tories have been trying to make cuts but as far as I am concerned they really haven't gone far enough. We are in the hole to the tune of nearly £2 trillion, really how long can that go on?

We have a massively oversized and hugely inefficient state. I've worked in local and central government and the amount of money I've seen wasted makes we want to cry sometimes.

Where would you cut?

[Halb]

edh said:

All roads lead to Land Value Tax (also the way to fund basic income as without it the cash gets swallowed up in rents)

I'd like to see LVT, alongside a flat tax.

[Alpinestars]

fblm said:

Alpinestars said:

Whilst I think there is a lack of understanding of havens and tax avoidance, I do think there need to be some rule changes on property held by non residents versus residents. Unlike the likes of Starbucks, Amazon etc, it's hard to see the value that some of the non resident property investors are bringing to the UK, whilst making huge gains and not paying UK tax on those gains like UK resident investors do. Wouldn't surprise me if there is a law change at some point.

It changed in 2015. Since then non residents lost CGT exemption on property. (Eta talking about individuals, no idea about foreign companies)

Edited by fblm on Friday 10th November 13:55

On residential property. Not commercial property. Numerous hedge and real estate funds make huge gains on UK commercial property, and because they are non resident, don't pay CGT.

[Halb]

AW111 said:

I have a different view - I happily claim legitimate deductions, but avoid contrived situations like that, even if legal (for now). I have ditched a previous accountant over his insistence that I should be claiming things that I felt were morally wrong although technically legal.
Would I like to pay less tax? Of course. But I also appreciate that society can't function without it.

YOu're probably looked on as a sort of freak with some mindsets round here.

[roachcoach]

Halb said:

Guvernator said:

Aren't we looking at this a bit backwards. We are arguing about who should pay more and fair share etc but why do we have such a large tax burden in the first place? Over my lifetime the tax burden has just got bigger and bigger. If making people pay more is unpalatable surely the alternative is to spend less. I know the Tories have been trying to make cuts but as far as I am concerned they really haven't gone far enough. We are in the hole to the tune of nearly £2 trillion, really how long can that go on?

We have a massively oversized and hugely inefficient state. I've worked in local and central government and the amount of money I've seen wasted makes we want to cry sometimes.

Where would you cut?

MPs expenses for a start.
Councils pissing money up the wall and harebrained schemes. I'm looking at you, trams and 20mph zones citywide as a starter for 10.

That being said, "cut" is probably not a great way to tackle it. I'd far rather see more intelligent spending and efficiency gains (not the modern day "efficiency::redundancies", I mean literally making things work better).

[AstonZagato]

Roman Rhodes said:

fblm said:

Roman Rhodes said:

Much misunderstanding around the subject of trusts. A standard UK discretionary trust of the sort you describe will pay 45% tax on all income and normal capital gains and dividend tax.

They appear to be more for IHT avoidance no? But it was the Mauritius trusts that really raise a suspicious eyebrow. I'm not sure why they are tolerated. I understand the very good reasons for legitimate businesses, like investment funds, being structured in transparent tax neutral jurisdictions, not so much trusts in secretive backwaters.

You'll have an immediate IHT liability if you put in more than the nil rate band - plus up to 6% tax every 10 years on the amount over the nil rate band. UK trusts don't really 'dodge' or avoid tax - they are more about keeping control of money and assets for the beneficiaries. I think the Mauritius vehicles were companies rather than trusts - and would appear to be 'well dodgy' in the way they were used (based on the scant facts in the media!).

As I understand it (IANAL), if the Trust owns a property (as in the situation reported), then you either have to pay the fair market rent to live in it (which needs to come out of some sort of income, which then gets taxed). The Trust then has a tax liability on the income. If you don't pay the rent, then HMRC assumes you have a taxable benefit to the tune of the fair market rent.
What the trust would do is move the house outside of your estate. However, in the UK, your principal private residence is part of your estate whether in your estate or not - HMRC looks through trusts. Other houses might get away with it.
I might be wrong but don't think there is much anyone can do to avoid paying IHT on their prinicpal private residence.

[anonymous-user]

Mrr T said:

fblm said:

It seems to me that the most egregious 'avoidance' schemes and structures use trusts to, AIUI, dissociate the assets from their owners/beneficiaries. In a few cases, like say caring for disabled children I get it but otherwise I'm struggling to see why they are accepted as legitimate structures. Can anyone explain why they are so widely tolerated/considered legit?

Besides the obvious use with parents/children you mention. In many jurisdictions the trust structure is the only way to securely structure unitised investment schemes. There are others available, for example UCITS in the EU, but many countries do not. For examples in Singapore and HK all unitised investment schemes are still trusts.

Edited by Mrr T on Friday 10th November 14:35

Thank you

[Digga]

Guvernator said:

Aren't we looking at this a bit backwards. We are arguing about who should pay more and fair share etc but why do we have such a large tax burden in the first place? Over my lifetime the tax burden has just got bigger and bigger. If making people pay more is unpalatable surely the alternative is to spend less. I know the Tories have been trying to make cuts but as far as I am concerned they really haven't gone far enough. We are in the hole to the tune of nearly £2 trillion, really how long can that go on?

We have a massively oversized and hugely inefficient state. I've worked in local and central government and the amount of money I've seen wasted makes we want to cry sometimes.

My dad's dearly departed nextdoor neighbour was of a similar view. He too has seen government as you do, his latter years were spent managing the local police pension investments (yes, they do have some, even though it is funded off balance sheet, before anyone says anything!). One of the topics he often returned to was having a "no change" party; he said by far the biggest waste of money and effort in government was the continual, often needless and more often than not counter-productive meddling that many parts of government and the public sector were subjected to. I think he had a very good point.

[anonymous-user]

Alpinestars said:

fblm said:

Alpinestars said:

Whilst I think there is a lack of understanding of havens and tax avoidance, I do think there need to be some rule changes on property held by non residents versus residents. Unlike the likes of Starbucks, Amazon etc, it's hard to see the value that some of the non resident property investors are bringing to the UK, whilst making huge gains and not paying UK tax on those gains like UK resident investors do. Wouldn't surprise me if there is a law change at some point.

It changed in 2015. Since then non residents lost CGT exemption on property. (Eta talking about individuals, no idea about foreign companies)

Edited by anonymous-user on Friday 10th November 13:55

On residential property. Not commercial property. Numerous hedge and real estate funds make huge gains on UK commercial property, and because they are non resident, don't pay CGT.

Interesting thanks. You're right, large untaxed gains on foreign owned commercial property looks like about as open a goal as any chancellor will ever be given. Probably can't bring themselves to set the cost basis at current levels!

[anonymous-user]

AstonZagato said:

Roman Rhodes said:

fblm said:

Roman Rhodes said:

Much misunderstanding around the subject of trusts. A standard UK discretionary trust of the sort you describe will pay 45% tax on all income and normal capital gains and dividend tax.

They appear to be more for IHT avoidance no? But it was the Mauritius trusts that really raise a suspicious eyebrow. I'm not sure why they are tolerated. I understand the very good reasons for legitimate businesses, like investment funds, being structured in transparent tax neutral jurisdictions, not so much trusts in secretive backwaters.

You'll have an immediate IHT liability if you put in more than the nil rate band - plus up to 6% tax every 10 years on the amount over the nil rate band. UK trusts don't really 'dodge' or avoid tax - they are more about keeping control of money and assets for the beneficiaries. I think the Mauritius vehicles were companies rather than trusts - and would appear to be 'well dodgy' in the way they were used (based on the scant facts in the media!).

As I understand it (IANAL), if the Trust owns a property (as in the situation reported), then you either have to pay the fair market rent to live in it (which needs to come out of some sort of income, which then gets taxed). The Trust then has a tax liability on the income. If you don't pay the rent, then HMRC assumes you have a taxable benefit to the tune of the fair market rent.
What the trust would do is move the house outside of your estate. However, in the UK, your principal private residence is part of your estate whether in your estate or not - HMRC looks through trusts. Other houses might get away with it.
I might be wrong but don't think there is much anyone can do to avoid paying IHT on their prinicpal private residence.

So then the reason all these Kings Road arse wipes live off trust income isn't really some respectably clever tax wheeze, its because their parents figured they were too thick to manage their own money?