International Consultant Salary Packaging

[meridian]

But that is the point, as with my Luxembourg experience, this was considered "grey", in fact it is common practice for foreigners. I don't see any difference. The fact is even if you do a bit of work for this Singapore company, it is perfectly legal.

The point I'm making is even if the IR decided to follow through on it, what would a judge decide if the consultant can point some physical evidence of work.

If the consultant can show that the work took place in Singapore then yes, I agree, it would probably be legal.

However, even if the work was Singaporean in nature but done through (say) Terminal Services from a desk in the UK then the earnings took place in the UK.

[Spartacus]

BB, I can see you are reluctant because you have done it yourself. However the fact of the matter is that unless the guy actually goes and does some work in Singapore, this is tax fraud. The fact that it might be tricky to gain a conviction or is common practice or is easy to fake or that other people commit other kinds of tax fraud doesn't make it any less illegal.

[meridian]

But that is the point, as with my Luxembourg experience, this was considered "grey", in fact it is common practice for foreigners. I don't see any difference. The fact is even if you do a bit of work for this Singapore company, it is perfectly legal.

The point I'm making is even if the IR decided to follow through on it, what would a judge decide if the consultant can point some physical evidence of work. The guy would be able to get references, a manager to vouch that he did work etc etc, and if it has been done properly, possibily even a couple of plane tickets.

Ah, I've jumped the gun slightly with a previous reply.

So in effect, what you're saying with regard to the additional evidence is that the fraud is less catchable if there is more evidence to support the "story"? That may be, but it doesn't detract from it still being a fraud.

It is no different to Ltd's employing their wives as "secretaries".

I don't know what you mean. My wife does all the things a secretary should (makes the tea, parades around the house wearing very little, ocassionally does some filing)

[BlasterBates]

Yes I agree but employing your wife as a secretary is no less illegal unless she really is working as a secretary. But everybody does it.

Why?

Don't they fear that knock on the door of the tax man ?

The fact is if after twenty or thirty years, if you were to send a signed confession saying your wife never worked as a secretary you might also be eligible for jail.

[Spartacus]

Yes I agree but employing your wife as a secretary is no less illegal unless she really is working as a secretary. But everybody does it.

Do they? I don't.

But that is false logic anyway. Lots of people burgle houses but that doesn't make it okay for me to burgle a house.

Anyway, we are all agreed that the proposal is tax fraud unless work is actually performed in Singapore. Some people are okay with that, others are not. But at the end of the day a crime will have been committed.

[BlasterBates]

Well actually there is a further point and that is what is "work". I for example filled out little forms. Now the intention was minimising tax but I did work. I did fill out forms and these forms weren't bogus they were fed into a marketing database. So was what I did illegal ?

So if this guy flies to Singapore or Australia, or anywhere that is not the UK and does some work, like fill out a form, then it isn't fraud.

[meridian]

Yes I agree but employing your wife as a secretary is no less illegal unless she really is working as a secretary. But everybody does it.

Why?

Don't they fear that knock on the door of the tax man ?

The fact is if after twenty or thirty years, if you were to send a signed confession saying your wife never worked as a secretary you might also be eligible for jail.

It's a lot more of a grey area than out-and-out premeditated fraud.

In a lot of cases, the spouse may not actually work permanently for the company but provides "support" services, filing, invoicing, etc. Okay, probably not a full-time job but there is some justification there. In a lot of instances the salary is only enough to take advantage of the tax-free allowances, so the reality is that there's very little personal tax involved.

But you're right, and it doesn't take a signed confession, if you were to ring up HMRC now and tell them that you're claiming salary for your wife but she doesn't work for you then you'd be in trouble.

[meridian]

Well actually there is a further point and that is what is "work". I for example filled out little forms. Now the intention was minimising tax but I did work. I did fill out forms and these forms weren't bogus they were fed into a marketing database. So was what I did illegal ?

So if this guy flies to Singapore or Australia, or anywhere that is not the UK and does some work, like fill out a form, then it isn't fraud.

It's not quite as cut and dried as that.

It's likely that if the payments were out of proportion to the work that was actually done it could be seen as an arrangement to defeat the intention of the tax acts.

And to pre-empt your next question, yes this is difficult to prove but doesn't make it any less wrong!!!!

[BlasterBates]

It's not quite as cut and dried as that.

That is why it is "grey".

We won't know until a foreign contractor has been jailed, just as it is feasible that someone might get jailed for employing his wife as a secretary. I doubt however that it would be jail, it would probably be back tax, and penalties.

[Spartacus]

That is why it is "grey".

We won't know until a foreign contractor has been jailed, just as it is feasible that someone might get jailed for employing his wife as a secretary.

You misunderstand, BB. What isn't quite as cut and dried is doing trivial work overseas and remitting thousands for it. For example, the OP could not go to Singapore, empty a bin in the office, get paid £25,000 for it, and maintain this was a legal arrangement if challenged.

There is no grey area here. You can only do this if you do work overseas commensurate with the reward. And, yes, you are unlikely to get caught just as if you burgled a house or mugged an old lady. It is still illegal though.

In the meantime, I feel you should turn yourself in as it's people like you that put up taxes for us law abiding sorts.

https://www.taxevasionhotline.co.uk/forms/employer.htm