Offshore clarification

[NadJ]

Where a worker is resident in the UK and the work is carried out in the UK, the intermediary (in Chapter 8) or MSC (in Chapter 9) is treated as having a place of business in the UK and, subject to other qualifying criteria, Chapter 8 and 9 do apply."

Another question. Say that the agency/client elected to obtain the services of an individual directly through an Offshore Ltd (Thereby avoiding the UK Ltd company). The worker is resident in the UK - Yes. However, the worker can't be proven to be the director of the offshore company, so can he be made liable for taxes on the total payments paid to the offshore company?

Curious.

[NotAllThere]

A lot depends on the relationship between the UK and foreign country. If Hector can't find out that you are a director, but suspects you are, you could face a lengthy investigation, and possibly criminal charges.

NotAllThere

[PAG]

A lot depends on the relationship between the UK and foreign country. If Hector can't find out that you are a director, but suspects you are, you could face a lengthy investigation, and possibly criminal charges.

NotAllThere

Do you really think they will go to such length just to get few thousand of pounds ??? Surely, it must cost more to invetigate.

[ElectricChair]

Do you really think they will go to such length just to get few thousand of pounds ??? Surely, it must cost more to invetigate.

dont forget they charge interest of 7% a year on any back-tax

[Zilver]

Offshore or not

For a while now I have been trying to understand why/if it is illegal to use an offshore corporation. Personally I contract in different european contries, so to me it makes sense to use an offshore company to work through.
I still do not understand if it is indeed illegal to use a chain like:
Client -> UK Agency -> UK Ltd -> Your favourite Caribbean Corporation.

Has anyone talked to an accountant who can answer this question? (and not just one of the many who will try to sell you "offshore corporation services")

Kind Regards,
Zilver

[NotAllThere]

Do you really think they will go to such length just to get few thousand of pounds ??? Surely, it must cost more to invetigate.

Of course not. But that wasn't the question.

For a while now I have been trying to understand why/if it is illegal to use an offshore corporation.

It's only illegal if you use it for some criminal activity - like money laundering or tax evasion.

NotAllThere

[meridian]

Do you really think they will go to such length just to get few thousand of pounds ???

Yes, to make an example of you to others.

Surely, it must cost more to invetigate.

Not necessarily - an easy tax inspection for Hector would be to examine the agency, find a contract with your name and your offshore limited's name on it, they'll put two and two together. If you make it difficult to prove that you're a director (shadow or otherwise) Hector will simply assess you personally and make you prove that you're not liable - this puts all the onus back onto yourself to provide proof.

[NadJ]

Not necessarily - an easy tax inspection for Hector would be to examine the agency, find a contract with your name and your offshore limited's name on it, they'll put two and two together. If you make it difficult to prove that you're a director (shadow or otherwise) Hector will simply assess you personally and make you prove that you're not liable - this puts all the onus back onto yourself to provide proof.

Are your comments based on what you think will happen or what you know happens? I.e. based on someone elses or your own experience?
If it is based on a real life situation. Then as you say:

Yes, to make an example of you to others.

...presumably, HMRC should have this exact scenario illustrated clearly somewhere?