Offshore Option

[Vallah]

QED...

You're not at liberty because your scheme depends on a QC's opinion on a point of law. Which may or may not be worthless, QC's are very good at telling what you want to hear, but it is your USP and you don't want anyone else getting wind of it. Fair enough.

But that opinion also represents a fairly major risk, given HMG's very wide-ranging attack on any kind of artificial avoidance. Which is why we treat your mysterious pronouncements and promises of hidden revelation as total hogwash rather than commercial confidentiality. After all, it's not you who has to pick up the pieces. Meanwhile we will continue to do all we can to dissuade the uninformed from joining your little party.

As is your right of course. I'll just point out that lots of people, after weighing up the risks, have decided that they like the service we provide. When they phone up to enquire about our service, we don't hide anything from them. We gets lots of questions like the ones on this thread, and we answer them honestly. If they think the risk is worth taking they sign up, if they'd rather pay higher rates of tax, they don't. We've also not had a single person miss a payment (unlike certain other companies) nor have we had anybody have a problem with HMRC. The Dec 9 announcement was a very good piece of legislation, but all it's done is spell the end of EBTs as a form of tax planning, which we were expecting and had planned for.

[malvolio]

As is your right of course. I'll just point out that lots of people, after weighing up the risks, have decided that they like the service we provide. When they phone up to enquire about our service, we don't hide anything from them. We gets lots of questions like the ones on this thread, and we answer them honestly. If they think the risk is worth taking they sign up, if they'd rather pay higher rates of tax, they don't. We've also not had a single person miss a payment (unlike certain other companies) nor have we had anybody have a problem with HMRC. The Dec 9 announcement was a very good piece of legislation, but all it's done is spell the end of EBTs as a form of tax planning, which we were expecting and had planned for.

a) No, you attract those who value income over risk. Not the same thing at all.

b) Dec 9th covers all income or things that can be construed as income paid to UK Tax Residents, not just EBTs and you are kidding yourselves (and your clients) if you believe you are exempt.. So the question stands: how do you avoid it?

[phileds]

Follow the money.

The scheme suppliers take 20% risk-free. The members take 80%, and suffer the possibility of incurring HMRCs nastiness.

And thanks to the Internet and forums such as this, it's practically a given that HMRC will snoop into any discussed scheme.

I was a member of the Montpelier scheme - approved by "leading tax counsel" (i.e. they paid someone for their professional but ultimately without-recourse opinion that the scheme was "OK"), and variously challenged by HMRC (and rebuffed) over the years. I was convinced that the scheme was based on sound existing legal principles. Unfortunately the government changed an existing law (HMRC say "clarified", I say retrospectively changed), with the result that thousands of scheme members now face massive retrospective tax bills.

It's all going through the appeal courts, but even if HMRC lose, it will have meant people having years of uncertainty hanging over their heads, at some personal cost. HMRC don't care, they're underpaid emasculated civil servants just doing their job. Thing is, have you got the speech ready to inform the wife and children that the family home and all your investments might have to be sold to pay a tax bill?

I used to be righteous about people and entities paying "their fair share" of tax (discuss ad infinitum) but it's clear that, as billionairess Leona Helmsley once stated, "Only the poor pay taxes", though I would amend that to say "Only the poorly advised pay taxes". All big companies happily avoid/evade tax, and governments collude in it, the US and the UK being the two biggest examples of countries which actively support tax avoidance via the offshore entities they control.

Fact is, HMRC would rather ten thousand small people got nabbed for dodging 10k each than one large company was nabbed for dodging £1 billion. Tax avoidance is not for the little people.

[Fred Bloggs]

Have to say that Mr V (as usual with these guys) isn't exactly making a convincing case here. Anyone reading this kind of stuff should run a mile from the schemes IMO.

[pastalista]

Follow the money.

The scheme suppliers take 20% risk-free. The members take 80%, and suffer the possibility of incurring HMRCs nastiness.

And thanks to the Internet and forums such as this, it's practically a given that HMRC will snoop into any discussed scheme.

I was a member of the Montpelier scheme - approved by "leading tax counsel" (i.e. they paid someone for their professional but ultimately without-recourse opinion that the scheme was "OK"), and variously challenged by HMRC (and rebuffed) over the years. I was convinced that the scheme was based on sound existing legal principles. Unfortunately the government changed an existing law (HMRC say "clarified", I say retrospectively changed), with the result that thousands of scheme members now face massive retrospective tax bills.

It's all going through the appeal courts, but even if HMRC lose, it will have meant people having years of uncertainty hanging over their heads, at some personal cost. HMRC don't care, they're underpaid emasculated civil servants just doing their job. Thing is, have you got the speech ready to inform the wife and children that the family home and all your investments might have to be sold to pay a tax bill?

I used to be righteous about people and entities paying "their fair share" of tax (discuss ad infinitum) but it's clear that, as billionairess Leona Helmsley once stated, "Only the poor pay taxes", though I would amend that to say "Only the poorly advised pay taxes". All big companies happily avoid/evade tax, and governments collude in it, the US and the UK being the two biggest examples of countries which actively support tax avoidance via the offshore entities they control.

Fact is, HMRC would rather ten thousand small people got nabbed for dodging 10k each than one large company was nabbed for dodging £1 billion. Tax avoidance is not for the little people.

Oh, yes, "God is always on the side of the big battlions" (Voltaire). From the investigations that I have seen and heard about, it isn't that HMRC is clever or well organised or has right on its side - it's simply that they can keep going longer than most little folks can afford to keep defending.

Wearing away the spirit, it becomes a war of attrition.

The law often becomes almost irrelevant in these investigations - you are guilty until you prove yourself innocent and most people can't afford to do that.

And they talk about "fairness" in the tax system.

Pastalista

[DonkeyRhubarb]

Personally I don't see any problem with these schemes, as long as you go in with your eyes wide open.

That means accepting the real possibility that the scheme could fail and you'll have to repay tax/nic + interest.

Of course it also means that the only sensible option is not to spend the extra money. Think of it as a cheap loan from HMG and save/invest it wisely.

Unfortunately, I suspect most people only look at the upside (the 85%).

[Fred Bloggs]

Fair point from DR but if those schemes give you 85% retention there realy isn't much extra money to be saved by the end user. I can't tell you exactly, I haven't worked it out, but in my case (using a SIPP and paying divis to Mrs Bloggs) I retain over 75% for certain and perhaps significantly more than 75% if I was to do the sums, I'm sure. With minimal downside risk.

[DonkeyRhubarb]

Fair point from DR but if those schemes give you 85% retention there realy isn't much extra money to be saved by the end user. I can't tell you exactly, I haven't worked it out, but in my case (using a SIPP and paying divis to Mrs Bloggs) I retain over 75% for certain and perhaps significantly more than 75% if I was to do the sums, I'm sure. With minimal downside risk.

I may be wrong about this but I'm assuming most people who use these schemes do so because they think they'd be on dodgy ground with ir35.

I know the risks of ir35 have been overstated but there must be a perceived risk otherwise why would so many go down the brolly route and forfeit almost half their income.

I doubt you'll find many these days jumping from Ltd to the schemes but they must be tempting if you're in a brolly.

[Wanderer]

Personally I don't see any problem with these schemes, as long as you go in with your eyes wide open.
That means accepting the real possibility that the scheme could fail and you'll have to repay tax/nic + interest.

The other thing to remember is that the "guarantee" offered by some of these schemes is only as good as the company that underwrites the guarantee. If it's the scheme itself then there is a real possibility that the scheme could shut down and the guarantee would be worthless.

[Fred Bloggs]

I may be wrong about this but I'm assuming most people who use these schemes do so because they think they'd be on dodgy ground with ir35.

I know the risks of ir35 have been overstated but there must be a perceived risk otherwise why would so many go down the brolly route and forfeit almost half their income.

I doubt you'll find many these days jumping from Ltd to the schemes but they must be tempting if you're in a brolly.

Yes, I agree, that's likely to be true.