Offshore: To move or not to move?

[paul britton]

[FONT=&quot]If you want to save tax you could; pay as little as £250 and get an offshore company (in a zero tax jurisdiction), open a bank account, then pay the offshore company £X per month for “consultancy services”, and then withdraw money from the offshore bank account with a “no-name” ATM card.[/FONT]
[FONT=&quot]This is a somewhat crude approach that might not withstand the scrutiny of HMRC; so moving offshore needs to be thought through properly. [/FONT]
[FONT=&quot]Some of the factors that will affect what options are viable:[/FONT]

• [FONT=&quot]Taxable income[/FONT]
• [FONT=&quot]Type of business activity[/FONT]
• [FONT=&quot]Current and future tax residency of beneficial owners[/FONT]

-Paul

 

[paul britton]

Further to the emails I've recieved in relation to the above post, please see the blog for more in depth info: http://yourbooks.com.cy/blog/

-Thanks

 

[Maslins]

?

Transfer pricing regulations blocked simple "schemes" like that years ago. If you pay more than market value for the consultancy services (it would appear in this instance these services have zero value) any excess over this will not be deductible for the UK business.

 

[JamesCartwright]

This is a somewhat crude approach that might not withstand the scrutiny of HMRC; so moving offshore needs to be thought through properly.

I think Mr. Britton is saying that this does not work, and that there are better ways to reduce tax by moving offshore (which he probably explains on his blog). He does not appear to be endorsing the idea of paying an offshore company "consultancy fees" and then withdrawing them with an anonymous ATM card.

I could be wrong, but that's just how I read it.

James.

 

[paul britton]

Zeno; great post; really very funny (it reminds my of the book "a story of o" - but let's not go there on this forum!)
James thanks for your clarification - that is what I meant.

No matter what we think, people set up this type of "fig leaf" operation and then just hope they stay off the radar. That might be ok for some, but the threads on this site asking for info about offshore companies, are presumably by people who wish to save some tax and sleep at night.

Some companies will simply shift the management and control of the business to a low-tax country however others adopt a different approach:
Diageo plc (the drinks giant) transferred ownership of brands including Johnnie Walker and J&B to an off shore subsidiary virtually tax-free. It pays UK corporation tax equal to about 2% of gross profits.

Moving ofshore can bring big benefits, but understand what you want to achieve and clearly identify the pro's and cons.

...A fig leaf might be cheap but it’s no good when the wind blows.

 

[JGOffshore]

As others have pointed out the basic idea which used to work won't anymore. Anti avoidance legislation sees to that. However it is still possible to legally use offshore companies, trusts and foundations.

Anyone interested in finding out a bit more can have a look at this blog post:

http://link4business.info/2008/08/investing-offshore-its-legal-so-why-not-do-it/

 

[firstoffshore]

As others have pointed out the basic idea which used to work won't anymore. Anti avoidance legislation sees to that. However it is still possible to legally use offshore companies, trusts and foundations.

Anyone interested in finding out a bit more can have a look at this blog post:

Is it legal in all countries to let their citizens to setup an offshore company?

 

[JGOffshore]

Is it legal in all countries to let their citizens to setup an offshore company?

As far as I am aware, perhaps with the exceptions of North Korea and the like, it is legal for citizens to set up offshore companies - but they may also have to report the fact to the tax authorities. That could be a problem for some people. Some countries "blacklist" certain other countries (including some EU member states who are breaking EU law by doing so).