"Dodgy" offshore schemes

[DigitalUser]

Trouble is we all have to start somewhere and the first baby steps as a contractor could lead you on a happy path which you will follow, without incident, for years or straight down a huge black hole with no ladder. I think that newbie contractors probably struggle to find the right information - we know it's out there (or on here if you will) but then again we know where to look and what to look for. As an example - if you didn't know anything about IR35, would you know to ask? Who would tell you that you needed to know? The client? The agency? No, because it's not their responsibility to advise you. I can see how newbie contractors get in a muddle and I can see how many get tempted by the offers put out their by dodgy scheme providers - in some cases it's blatant greed but in others I think it's just ignorance of the facts.

I strongly disagree - we're all adults, and if people choose to plead ignorance and/or stick their heads in the sand (and then cry when the resulting consequences emerge) they have only themselves to blame. It amazes me the number of contractors I know whose financial affairs are in disarray, but people setting themselves up as businesses should make efforts to be fully aware of what they're getting themselves into.

Ultimately, if something looks too good to be true, then it usually is, and I feel a lot of people getting into tax planning schemes have failed to heed this anecdotal piece of advice.

[DigitalUser]

I've stopped being surprised by how widespread membership of these schemes seems to be.

I used to think this was rather a niche undertaking, but three of the last three client sites I have been at have contained at least one contractor who openly discussed being in such a scheme, including one who claimed to be in the same "payment solution" as Jimmy Carr.

I know of someone in same said payment solution scheme - he's being bombarded with letters from HMRC as we speak. The promoters claim to have a substantial fighting fund to defend Vs HMRC - it'll be interesting to see the outcome of this in the courts (if it gets that far).

[Maslins]

There should be a way of going after providers as I think that this is borderline criminal fraud.

I'm inclined to agree. I'm guessing it's currently a case of "the punter knew what they were getting into and signed agreeing to the risks". However, I'm sure there are a fair few people setting up scheme after scheme, making loads of dosh for a few years then when HMRC start sniffing round all the clients they close up and start a new one.

Sad thing is I can imagine there'll always be a large stream of new suckers.

[LisaContractorUmbrella]

I strongly disagree - we're all adults, and if people choose to plead ignorance and/or stick their heads in the sand (and then cry when the resulting consequences emerge) they have only themselves to blame. It amazes me the number of contractors I know whose financial affairs are in disarray, but people setting themselves up as businesses should make efforts to be fully aware of what they're getting themselves into.

Ultimately, if something looks too good to be true, then it usually is, and I feel a lot of people getting into tax planning schemes have failed to heed this anecdotal piece of advice.

I am not saying that there are those that used dodgy schemes in the full knowledge that they were dodgy but I do genuinely think that people have been caught out because there is a lack of information available. Look how many questions we are asked on here about contracting - if concise, easily understandable information were more readily available at the point when someone starts in contracting it wouldn't happen so often

[DigitalUser]

I am not saying that there are those that used dodgy schemes in the full knowledge that they were dodgy but I do genuinely think that people have been caught out because there is a lack of information available. Look how many questions we are asked on here about contracting - if concise, easily understandable information were more readily available at the point when someone starts in contracting it wouldn't happen so often

Again, I think that's more to do with ignorance rather than information being readily available. I don't see the parallel between setting yourself up as a contractor and tax planning/avoidance.

[Alan @ BroomeAffinity]

I am not saying that there are those that used dodgy schemes in the full knowledge that they were dodgy but I do genuinely think that people have been caught out because there is a lack of information available. Look how many questions we are asked on here about contracting - if concise, easily understandable information were more readily available at the point when someone starts in contracting it wouldn't happen so often

I suppose we just need to keep banging the drum. I periodically email my clients / post on blogs / social media etc about the dangers of these in the hope that the gullible or uninformed will see it and seek more information.

[JRCT]

I started contracting a few months before the whole Jimmy Carr thing kicked off. I'd never heard about how dodgy these offshore schemes were before that. But, as I was setting up my Ltd and sorting out how I was going to do business, I got an email offering me 96% take home. Of course, on the face of it, sounds great. So I read what they had to say and my first instinct was "this is dodgy".

There is a massive difference between trying to be tax efficient and making the odd cock up (ie. claiming for something that you probably shouldn't such as travel or mobile) and putting your money into some offshore company to be paid by a loan. Anyone who genuinely thinks that's ok deserves everything they get.


One thing I want to ask about this though, everyone talks, quite rightly, about these schemes being dodgy from the tx and HMRC perspective. But, one thing that struck me about this, that I've not seen anyone else ever mention is the loan bit.

Even if it was legit, why would I give c£100k a year of my hard earned money to some offshore company who will then give me a loan that, in reality (as far as they say), I don't ever have to pay back?

What's to stop them getting in touch with me after 5 years of doing this and saying "You know those 5 loans you signed up for? Well, we want it back. You owe us £500k".

[cojak]

If it's a real loan then it will HAVE to be paid back at some time.

Which is why HMRC are allegedly going after widows of deceased contractors...

[LisaContractorUmbrella]

I started contracting a few months before the whole Jimmy Carr thing kicked off. I'd never heard about how dodgy these offshore schemes were before that. But, as I was setting up my Ltd and sorting out how I was going to do business, I got an email offering me 96% take home. Of course, on the face of it, sounds great. So I read what they had to say and my first instinct was "this is dodgy".

There is a massive difference between trying to be tax efficient and making the odd cock up (ie. claiming for something that you probably shouldn't such as travel or mobile) and putting your money into some offshore company to be paid by a loan. Anyone who genuinely thinks that's ok deserves everything they get.


One thing I want to ask about this though, everyone talks, quite rightly, about these schemes being dodgy from the tx and HMRC perspective. But, one thing that struck me about this, that I've not seen anyone else ever mention is the loan bit.

Even if it was legit, why would I give c£100k a year of my hard earned money to some offshore company who will then give me a loan that, in reality (as far as they say), I don't ever have to pay back?

What's to stop them getting in touch with me after 5 years of doing this and saying "You know those 5 loans you signed up for? Well, we want it back. You owe us £500k".

If it was a genuine loan absolutely nothing but the fact is that these are sham arrangements which have no purpose other than to avoid tax - hence the attention from HMRC

[TykeMerc]

There should be a way of going after providers as I think that this is borderline criminal fraud.

No kidding.
At a superficial level they look not a lot different from the investment scam type schemes that are criminal fraud.

The end result of the provider scampering off into the distance with pockets full of cash and the suckers facing the consequences doesn't help the fraudulent image either.

As others have pointed out it's shocking just how many active and potential suckers there are.