Getting fed up paying loads of tax

[Mr D]

Overseas investment is like a dirty word! Probably most people who have an employee pension plan have overseas investments...

Remember a few years back when the government was red hot on people with swiss bank accounts not paying their taxes?
The government got HMRC to focus efforts on people with swiss bank accounts. Result was pretty dismal, most of them were already paying taxes or not liable for taxes. What the media had been led to believe by campaigners and what was reality were two very different things when investigation done properly.

 

[dan19900]

So the really rich that you claim don't live here - hey they don't need to pay here either.
The really rich who do live here they do pay here. They are included in the 1%.

Well, the ones who live there less than 6 months per year or send their wife to sit in Monaco for 6 months of the year.
Pretty much none of the British billionaires pay tax in the UK.

 

[Gordon - Commercial Finance]

Pretty much none of the British billionaires pay tax in the UK.

To which kind of tax do you refer?

 

[Mr D]

Well, the ones who live there less than 6 months per year or send their wife to sit in Monaco for 6 months of the year.
Pretty much none of the British billionaires pay tax in the UK.

Really?
Care to name some that are resident in the UK and manage to avoid paying tax in the UK?

 

[Gordon - Commercial Finance]

Care to name some that are resident in the UK and manage to avoid paying tax in the UK?

Let's also name some of the British billionaires who are not British, but gained UK citizenship to take advantage of the UK's favourable tax arrangements...

 

[Deleted member 59730]

The papers love a story about companies not paying tax. Remember Starbucks nearly got hung because they were seen to have not paid very much UK corp tax? No mention of the millions they have paid in income tax, employers NI, all the VAT they collect...

Costa Coffee also pay all those taxes plus corporation tax.

 

[Gordon - Commercial Finance]

Costa Coffee also pay all those taxes plus corporation tax.

Very good point. I will partially climb down.
Point still remains though, Starbucks do pay a lot of tax, and they do also pay corporation tax - more than £5million in 2016. In comparison with Costa they don't look quite so good, but then in comparison with Café Nero (£0 corporation tax in 2017) they're doing ok.

 

[Mr D]

Let's also name some of the British billionaires who are not British, but gained UK citizenship to take advantage of the UK's favourable tax arrangements...

Yes, why should they pay tax here - they didn't get anything from our education system, our NHS, our benefits system.

 

[Mr D]

Very good point. I will partially climb down.
Point still remains though, Starbucks do pay a lot of tax, and they do also pay corporation tax - more than £5million in 2016. In comparison with Costa they don't look quite so good, but then in comparison with Café Nero (£0 corporation tax in 2017) they're doing ok.

People also miss out that Starbucks include franchised places - some of the places that protests took place were at different companies who may or may not have been paying any corporation tax themselves but had nothing to do with someone else paying.

 

[SteveHa]

Holy crap, how did it get to this. Yes, the current government has, over the past 10 years, hit the small and middle man hard, whilst giving in to big business. What do you expect from a government that is funded by big business?

And yes, tax avoidance, whether small or large, when the scheme is contrived is morally wrong, but it isn't illegal, and should not be criminalised because the press says it should be.

Government has an option. Keep on doing what they are doing and drive taxpayers into the black economy, or fix the damned legislation. I work with it on a daily basis, and have the entire tax code at my fingertips. I know where to find stuff generally, and still struggle tying it all together, sometimes.

Don't blame the men in the street. Blame an ill advised government who can't get the law right. We have one of the most laborious tax codes in the world, currently at around 20,000 pages of disjointed legislation, and they just keep adding to it to plug holes, rather than making it easier to comply with and more accessible. (example: Entrepreneurs relief legislation is found in TCGA S.169H onwards. Nowhere in TCGA will you find the anti-avoidance legilsation, or even a reference to it. For that, you have to go to ITTOIA S.396b, which means you have to know it's there to even know it exists, and if you don't know, woe betide you when you get it wrong. Catch 22, anyone?)

Either take the fight to where the fight should be, or get out of dodge.

 

[Mr D]

Holy crap, how did it get to this. Yes, the current government has, over the past 10 years, hit the small and middle man hard, whilst giving in to big business. What do you expect from a government that is funded by big business?

And yes, tax avoidance, whether small or large, when the scheme is contrived is morally wrong, but it isn't illegal, and should not be criminalised because the press says it should be.

Government has an option. Keep on doing what they are doing and drive taxpayers into the black economy, or fix the damned legislation. I work with it on a daily basis, and have the entire tax code at my fingertips. I know where to find stuff generally, and still struggle tying it all together, sometimes.

Don't blame the men in the street. Blame an ill advised government who can't get the law right. We have one of the most laborious tax codes in the world, currently at around 20,000 pages of disjointed legislation, and they just keep adding to it to plug holes, rather than making it easier to comply with and more accessible. (example: Entrepreneurs relief legislation is found in TCGA S.169H onwards. Nowhere in TCGA will you find the anti-avoidance legilsation, or even a reference to it. For that, you have to go to ITTOIA S.396b, which means you have to know it's there to even know it exists, and if you don't know, woe betide you when you get it wrong. Catch 22, anyone?)

Either take the fight to where the fight should be, or get out of dodge.

Perhaps we need a simpler tax code. Say a dozen pages.

Trouble is MPs and special interest groups, unions, accountants, tax advisers, campaign groups etc all want what they want and few appear to want anything that causes them to pay more tax.

Simple would be easy to do. It would also be brutal.

Some of what the media refers to as loopholes is not a loophole but what the government intended. They can and do change behaviour by policy.
Make it easy for people to become self employed or have limited companies billing for services. Then find out costs and tax receipts are down because so many people are self employed or companies billing for services. So hit the self employed and those using companies in other ways to cause a change in behaviour.

 

[SteveHa]

The problem is that the Office of Tax Simplification (OTS) don't actually do very much to simplify. Do a Google search for the most complex tax code in the world, and the UK has been frequently cited since 2011.

Meanwhile, there are countries (I can't be sure about this since I'm working from memory) where the tax code runs to just a few 100 pages. The Philippines may be one such country, whilst ours is stupidly long and disjointed.

As a former HMRC employee, and now a tax specialist in the private sector, I would heartily welcome genuine simplification.

And you are correct that Government attempts to influence behaviour through tax. That, however, is not the job of Government. The job of Government is to govern the country, and to maintain law and order. Not to influence what people do lawfully to have them stop doing it.

 

[billybob99]

So I am getting fed up with this country and the taxes you have to pay. To me its a complete and utter rip off, the more successful you are the more you have to pay. Dont get me wrong, yes I know we have a health service to pay for and lots of other stuff but its just way too much.

I am looking for advice on having a offshore company.

At the moment I am a director of a limited company and run the business obviously from the UK. The business can be run from anywhere in the world as there is no physical stock or assets.

Is there any accountants out there who can advise me on what would be the best approach to avoiding UK taxes?

It is pretty easy to open an offshore company, a simple Google will get you going.

A personal favourite is SFM. The cheapest option is opening an offshore company in Belize.

Takes around 2-3 working days, bank account, online banking, debit/credit card etc. At the end of the day there is no "bank" there - its all just paperwork, and its all powered by HSBC, in most cases.

Your company only needs 1 director minimum, no taxes to pay and no real accounting or reporting requirements, although as per Section 73 (1) of the IBC Act, revised edition 2011, a company should maintain such accounts and records as necessary or desirable to reflect its financial situation.

Was very straight forward and can't really complain.

 

[SteveHa]

It is pretty easy to open an offshore company, a simple Google will get you going.

A personal favourite is SFM. The cheapest option is opening an offshore company in Belize.

Takes around 2-3 working days, bank account, online banking, debit/credit card etc. At the end of the day there is no "bank" there - its all just paperwork, and its all powered by HSBC, in most cases.

And if management and control is exercised from the UK, it will still be tax resident in the UK, and subject to corporation tax, anyway.

And UK resident participators will still be subject to UK tax.

So you see, it achieves absolutely nothing.

 

[dan19900]

To which kind of tax do you refer?

Well corporation tax/dividends/income tax seeing as that's what the thread is about. You've still not let me know how someone on 200k per year can pay only 20-25% tax.

I don't really agree with your points about it being fine for big companies to pay little corp tax because they pay other taxes being ok though. If Starbucks (or whoever) wasn't here then people wouldn't stop drinking coffee or spending their money, they'd go and buy from somewhere that paid the taxes Starbucks paid AND corporation tax.

Really?
Care to name some that are resident in the UK and manage to avoid paying tax in the UK?

I already told you one, Philip Green. Just put everything in your wifes name and tell her to go and sit in Monaco for 6 months of the year.
As I already said it doesn't bother me as I've done the same. I'm just making the point that the middle-high earners have to pay 40-50% tax because the really rich or moderately rich directors (like me) that can easily change their residency but still pretty much live in the UK pay nothing.

 

[Mr D]

I already told you one, Philip Green. Just put everything in your wifes name and tell her to go and sit in Monaco for 6 months of the year.
As I already said it doesn't bother me as I've done the same. I'm just making the point that the middle-high earners have to pay 40-50% tax because the really rich or moderately rich directors (like me) that can easily change their residency but still pretty much live in the UK pay nothing.

So do you want wives assets treated as husbands assets simply because the wife purchased them in her own name?
She is the shareholder, not him. And she will be subject to whatever tax laws relates to her income from shareholding where she is resident.
That's up to the country concerned, not UK.

So again which UK billionaires are resident and avoid tax? He isn't a billionaire as you agree.

 

[dan19900]

So do you want wives assets treated as husbands assets simply because the wife purchased them in her own name?
She is the shareholder, not him. And she will be subject to whatever tax laws relates to her income from shareholding where she is resident.
That's up to the country concerned, not UK.

So again which UK billionaires are resident and avoid tax? He isn't a billionaire as you agree.

I didn't say they were residents here (that's my entire point lol), I said they basically live in the UK whilst not paying tax. Just search 'British Billionaires' and let me know if any pay dividends tax in the UK, doubt it.

 

[Mr D]

I didn't say they were residents here (that's my entire point lol), I said they basically live in the UK whilst not paying tax. Just search 'British Billionaires' and let me know if any pay dividends tax in the UK, doubt it.

But she doesn't live in the UK.

 

[The Byre]

The problem is that the Office of Tax Simplification (OTS) don't actually do very much to simplify. Do a Google search for the most complex tax code in the world, and the UK has been frequently cited since 2011.
Meanwhile, there are countries (I can't be sure about this since I'm working from memory) where the tax code runs to just a few 100 pages. The Philippines may be one such country, whilst ours is stupidly long and disjointed.

This!

In Germany, there is a book called Das Bundessteuergesetz and I have an old copy. It is of course available on-line and cases of precedent and interpretation are sited. It is revised slightly every year and it is within the wit of any tax official and accountant to understand any and all parts of German tax laws. If I want to find out what the tax implications of something might be, I can look it up - if I am still unclear, I can call our accountants and they will understand and explain things to me.

Here, it took weeks and a very capable accountancy partnership to sort out if the use of a building was subject to VAT or not. What aught to have been a simple and straight-forward affair, took a specialist in VAT several days to get to the bottom of it.

The British side of me delighted in the absurd complexities involved and the counter-intuitive and conflicting laws involved - but the German side of me was muttering rude oaths in German and saying things like "Kein Wunder, nichts hier funktioniert!"

 

[billybob99]

And if management and control is exercised from the UK, it will still be tax resident in the UK, and subject to corporation tax, anyway.

And UK resident participators will still be subject to UK tax.

So you see, it achieves absolutely nothing.

The nominee director of the company in question lives in Belize, and everything is exercised from that country in question.

People have been doing this for years and years, whilst living in the UK, paying 0 tax - it just comes down to a question of morals at the end of the day.

Everyone is banging on about using offshore companies to avoid tax, but there are just as many crooks, banned from running a company, using this exact same method to run businesses.

 

[SteveHa]

You may want to look at legislation regarding shadow directors.

 

[Alan]

There are plenty of places that you could move to with lower tax rates and Chad is the obvious one that springs to mind as you won't have to pay any income or corporation tax there at all.

The standard of living is much lower than it is in the UK but you get what you pay for

This is the obvious answer to the OP, as stated the business can be operated anywhere, so earning the same and zero tax in a poor country, the OP will be living like a king.

Although maybe Chad is a bit extreme.

However, depending on industry there are other options too. E.g. Romania has had zero income tax for IT employee's since 2004 - one of my younger relatives has emigrated there and happily IT consults remotely back to UK companies. Indeed, if I wasn't old and settled I'd probably be there too.

 

[billybob99]

You may want to look at legislation regarding shadow directors.

I did and there is nothing that can tie me to any offshore company.

 

[SteveHa]

In that case, knock yourself out with your aggressive tax avoidance, and when HMRC come knocking, don't say you weren't warned.

I'm out.

 

[UK Contractor Accountant]

I did and there is nothing that can tie me to any offshore company.

how about the nominee agreement that you/he signed that says the Belize Director has to act in accordance with your instructions.

When I worked in a large Accountancy Practice in London I had to check all the nominee forms of shell companies a large Supermarket set up to negotiate land purchases for future sites. Documents exists!

 

[billybob99]

In that case, knock yourself out with your aggressive tax avoidance, and when HMRC come knocking, don't say you weren't warned.

I'm out.

It's a short life, I don't think they will get me in this life, there are bigger fish to fry.

 

[billybob99]

how about the nominee agreement that you/he signed that says the Belize Director has to act in accordance with your instructions.

When I worked in a large Accountancy Practice in London I had to check all the nominee forms of shell companies a large Supermarket set up to negotiate land purchases for future sites. Documents exists!

Yes you're correct there are a few documents, if found would spoil the party.

 

[Alan]

Why bother with the offshore aspect, I'm sure there are many ways of hiding revenue from HMRC, cash being obvious, having bank accounts that are not reflected in the books would be another - I'm sure you can come up with a dozen creative illegal activities that you have a low probability of being caught at, and even if it was considered fraud if you got caught, as a white collar crime even if you get more than a suspended sentence it would be a soft stay in an open prison?