How would this one stand up then?

[insight14]

A few years ago a friend was using a very creative umbrella company - haven't seen him in a while, so don't know if they are still around.

Basically, they would pay you whatever portion of your income you wanted in the UK (say 30% - enough for you to live on), on which you pay NI, PAYE etc. Then, when you went on holidays (for a period over 7 days), you were said to have been "consulting" for your extra 70% to a Singaporean firm in Singapore and thus liable to pay Singapore tax (which was only 10%).

Obviously dodgy, but difficult for the IR to prove otherwise?

[insight14]

Entirely possible yes... He is certainly not averse to risk-taking!

[privateeye]

Not 100% sure on this one, but I think you are required to be out of the country for a certain period of time otherwise the IR are entitled to charge you UK tax minus local tax but no rebate if it works out that way. I think you are only allowed in the UK for approx 90 days per tax year to get the benefits of local tax.

The IR created a fuss with me a few years ago when the Swiss gave me a very low tax rate. I was only there 4 months but moved on to another country. The IR were trying to get back the tax I saved in Switzerland but I escaped this as the next contract was still outside of the UK.

[ASB]

ho hum

Obviously dodgy, but difficult for the IR to prove otherwise?

Still UK resident, liable for tax on worldwide income. IR don't need to prove anything. Friend needs to disprove (if investigated of course). 100% penalties would be a likely result. And maybe jail time.

From the payer there is also the possibility of false accounting as well.

[Rebecca Loos]

ASB is right, however there is a possibility that you are not UK Resident, or ordinarily resident or UK domiciled. Complex rules govern anyone's status as to residency, ordinary residency and domicile, and this affects the tax status of any income earned outside the UK.
So it is possible (although under specific circumstances only) that your world wide income is not taxable in the UK. But it would be hard if you are a UK citizen, have always lived in this country and own a house here.

[insight14]

There must have been more to the scheme than I've represented I'm sure. He is a Kiwi (dodgy kiwis!), which may have helped in disproving being UK domocile. Not sure how they explained this away though.

[up4it]

so the illegal immigrants are all IT workers coming back here to work on the quiet!! ;-))

[Rebecca Loos]

if he is a Kiwi, then I am sure he would have been able to register his residency and domicile status appropriately for the scheme to work