Offshore Umbrella????!!

[kimera]

Hypothetical scenario

If your "umbrella" or for that matter "Ltd" was in say Gibraltar so your employer was in a low/no income tax area how would the british government rob you of tax?

Is it based on your location of work or where you are paid from?

This may have a very simple answer ie "dont be so f'ing stupid" but has caused much debate in the office as none of us are IR inspectors

[ChimpMaster]

Generally it is the location of where the work is performed.

[ASB]

Hypothetical scenario

If your "umbrella" or for that matter "Ltd" was in say Gibraltar so your employer was in a low/no income tax area how would the british government rob you of tax?

Is it based on your location of work or where you are paid from?

This may have a very simple answer ie "dont be so f'ing stupid" but has caused much debate in the office as none of us are IR inspectors

Quite Easily. International taxation is dependant upon a number of factors. Broadly domicile and residency. This is applicable both corporate and individual.

Assuming the Gibralter company was managed by nominees it might just be possible to stop that company from being deemed UK resident. However this is unlikely since you will "have the powers of a director" and under UK law it will become resident where you are.

Of course it will also be liable to it's taxes in Gibralter (I suspect this will be a one off annual fee around 1,000). You are very unlikely to find this is covered by any DTA between Gib and the UK.

However, let us assume that the offshore avoids becomeing resident (would proably be a miracle but you never know). The UK is likely to want to charge to UK CT it's UK operationsd anywhere. Another miracle is also possible.

In this event you would have paid the flat rate CT due wherever it was incorporated.

Now, look at you. As UK resident you are obligated to have all your worldwide income charged to UK tax. So in the event that you are inside IR35 you are just going to get taxed on it (if the company doesn't pay they go to you because it is a personal tax not corporate).

If you are outside IR35 then you are home and dry. After you have received the assement and managed to conviince the comissioners that it really wasn't you income that is.

There are offshore schemes that can be effective, but if you are UK domiciled, resident and ordinarily resident you'll have serious difficulty finding one that holds up to scrutiny. Jail time is often the result.