Off-Shore companies
Discussion
How easy is it to set up a company is a nice "you don't have to pay any tax" like situation. Looking to raise invoices not many probably 7-8 a year just need a company name and address really for the headed paper but don't really want a paper trail back to the UK. And no I am not doing VAT carousel fraud or a drug dealer.
How can these off shore companies escape UK tax when all their trading activities and their management base still lie within the UK?
Do they provide genuine legal tax avoidance opportunities or are they really sham operations which only "work" because those operating them are naieve and ignorant of limited company tax residence status rules?
Do they provide genuine legal tax avoidance opportunities or are they really sham operations which only "work" because those operating them are naieve and ignorant of limited company tax residence status rules?
Eric Mc said:
How can these off shore companies escape UK tax when all their trading activities and their management base still lie within the UK?
Do they provide genuine legal tax avoidance opportunities or are they really sham operations which only "work" because those operating them are naieve and ignorant of limited company tax residence status rules?
Do they provide genuine legal tax avoidance opportunities or are they really sham operations which only "work" because those operating them are naieve and ignorant of limited company tax residence status rules?
Agreed.
I think the OP is asking the 'initial question', in the hope that there may be a possibility.
In general from the research setting up an offshore company brings additional costs and is only legally applicable in very certain situations.
So if you are going to evade tax through a scheme which does not work, then you may as well do it onshore!
The whole situation is a minefield, and one you need professional advice for. There is also the factor that the 'powers that be' change the rules every year to minimise the amount of tax avoidance possibilities. Thus you could be left with an expensive to run and difficult to administrate offshore company which may not save any tax.
The simple answer is 'no', but there are possibilities if you are willing to spend a bit of money on specialist help and running costs.
Jo Strummer said:
er..............I don't care? Just want to know find out how feasible it is to do. It will only be a small amount of activity and its for the for the convenience of the client not me.
How easy to set up an offshore company: fairly. How easy to evade HMRC: fairly
How easy to evade detection longer term: harder
How easy to evade having to pay up once caught: pretty much impossible.
How is it going to be "easier" for the client?
I'm with Justin on this one, if you are going to do a spot of tax evasion you may as well just do it onshore. Adding in the offshore element is going to add cost, complexity and probably scrutiny from HMRC.
If I was going to engage in such practices, then I reckon just invoicing the client as a private individual and not declaring the income would be about the most feasible strategy...
Having looked at a wide range of "offshore" schemes, they tend to be i) of dubious legality, ii) targeted at high incomes (£100k+), iii) in the firing line of HMRC, iv) little better (in terms of net %) than a well run UK Ltd.
I have a friend with an offshire company and a UK one. He moves goods betwen non EU countries. He deals only with non EU companies and countries through his off-shore company and any UK work goes through his Uk company. He has a notional office in the CIs. and on the face of it his UK office only deals with the UK work, and oddly occasionally makes a loss because they have large overheads.
HMRC don't seem to have any insight to what the CI company are doing/not doing and he ignores anything HMRC say about his off-shore company.
It all feels a bit precarious to me. He has worn a stripe suit for HM in the past.
Leftie said:
He deals only with non EU companies and countries through his off-shore company and any UK work goes through his Uk company.
That's the crucial bit - many large US corporations do their International (non-US) business through subsidiaries based in places like the Caymen Islands. Questions were recently raised about how much business (and profit) Microsoft puts through its Ireland subsidiary - they route their patent income there as patent income is tax-free in Ireland.
It's possible to do the same thing by basing a company (virtually) in the Isle Of Man.
If all your business in in the UK, then such options aren't possible.
The Revenue couldn't care less where the company is registered. If the company is run and managed from the UK, then it will be subject to UK Corporation Tax on its profits.
If the directors/shareolders are resident in the UK for tax purposes, they will be liable to UK Income Tax and National Insurance contributions.
If the directors/shareolders are resident in the UK for tax purposes, they will be liable to UK Income Tax and National Insurance contributions.
Eric Mc said:
The Revenue couldn't care less where the company is registered. If the company is run and managed from the UK, then it will be subject to UK Corporation Tax on its profits.
If the directors/shareolders are resident in the UK for tax purposes, they will be liable to UK Income Tax and National Insurance contributions.
If the directors/shareolders are resident in the UK for tax purposes, they will be liable to UK Income Tax and National Insurance contributions.
I am guessing that is why my associate (notice how he has gone from 'friend' to 'associate'?) also has a UK business upon which he pays some PAYE and CT.
I recall him saying that the filing of accounts in the CI is onerous and detailed.
Is the pan-international agreement on personal banking ( as per the other thread) also being extended to businesses? I guess that is the critical thing: that if HMRC can only get minimal information and there is no disclosure it is hard for them to pin down a company trading exclusively outside but being managed from the UK, especially when the UK operation has a legitimate UK income and workload to justify offices here.
I will tell him to get his suit out.
I'm not sure what the situation with offshore registered limited companies is regarding these new bank disclosure rules.
As ever, one has to be of a certain mental atitude if one wants to essentially break the law in running ones's own businesses. The important thing to remember is that failure to disclose to HMRC what you are required to disclose is not a legitimate tax planning exercise - whatever your own moral views on taxation are.
As ever, one has to be of a certain mental atitude if one wants to essentially break the law in running ones's own businesses. The important thing to remember is that failure to disclose to HMRC what you are required to disclose is not a legitimate tax planning exercise - whatever your own moral views on taxation are.
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