Accountant advised offshore setup.

[ASB]

1.Is there infact a threshold where dividends are subject to further tax.

2.Is anyone else working under this arrangement and is it legal.

and

3.Has anyone heard of anyone being burnt through such an arrangement.

Thanks in advance for any information you can provide me.

1. It's not specific to dividends, but when you go into the higher rate band (> approx 40k) then the tax rate goes up. In the case of salary it is paid before you receive it. In the case of dividends it is not. The sums are worked out on your tax return and it should equate to 25% of the net dividends received in excess of the higher rate threshold.

2. I expect so and legality will depend upon the detail of the scheme. Generally the schemes are legal but some are more open to attack than others.

3. Yes. There are a plenty of cases of people being "burnt". However if the arrangements are used correctly and properly declared and any additional liabilities as a result of payments/loans etc made then there should be few problems.

General advice received would be "run a mile". Personally I think that may be valid advice for a lot of people. The key thing is to know what you are getting yourself into, what the potential downsides are and whether or not the scheme has been successfully defended, whether it is properly declared if it needs to be etc.

Offshore schemes can work. It depends on the scheme and the individual circumstances of the subscriber. There is no one size fits all type of arrangements. Generally they rely on interpretation of legislation and double tax agreements. Often loans and EBTs (though these are, in my view, very vulnerable).

HMRC have a vast armoury of weaponry with which to attack. Providers have similar abilities in defence. However in the event of a loss at commissioners - or acceptance of an assessment the buck will stop with the subscriber, not the promoter.

Ultimately if you want to be sure of no problems all you can do is take all your money as salry paying full NI and PAYE. You give HMRC loads but can sleep easilly. Even dividends puts you further up the risk scale. Going offshore puts you yet further up it.

Ultimately it's you choice. If you go for it ensure it is fully explained. If you feel so inclined get a professional opinion on it. You won't get that here through generalities.