Originally posted by xoggoth
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Reply to: Tax Avoidance in The Times
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Previously on "Tax Avoidance in The Times"
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The K2 tax scheme, a Jersey-based accountancy arrangement, is used by 1,100 people.
It works by transferring salaries into a Jersey-based trust, which lends investors back the money.
As the loan can technically be recalled, it is not subject to income tax.
Jersey is self-governing, with its own financial, legal and judicial systems. It has no VAT in place and sets its own income tax.
And low taxation is the reason why the affluent flock to the tiny island.
Income tax is a flat-rate of 20 per cent. Britain, in contrast, charges top earners 50 per cent, although this will fall to 45 per cent next April.
Jersey's s Goods and Service Tax (GST) - equivalent to the UK’s 20 per cent VAT - is also far lower at 5 per cent.
But beyond that, non-residents have also benefited. An accountancy industry has thrived in what critics say is a lax regulatory environment – finance makes up 41 per cent of its economy compared to, say, 4 per cent for hospitality.
But ‘tax havens’ worldwide, from Bermuda to Liechtenstien, have come under pressure to clean up their act as the cash-strapped U.S. authorities and EU governments try to claw back tax lost to avoidance schemes.
Jersey rejects the criticism saying it is a ‘transparent and cooperative jurisdiction’. It calls the perception of it as a tax haven an ‘ancient myth’.
Read more: The 1% tax haven: Comedian Jimmy Carr 'has £3.3m in Jersey avoidance scheme' | Mail Online
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Originally posted by Kanye View PostBut surely if they call the loan in they then have to give you your original capital that you could pay it off with?
YouSome company gifts themyour own moneythe fees for your services, which they thenlaunderloan to you.
If they call the loan in, what happens toyourthe original money?
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Originally posted by Bunk View PostThe loan schemes are usually something along these lines:
The money from your contract goes to the company running the scheme. They loan you back the money minus their fee. No tax is payable on a loan. The loan is never called in. The dodgy part is that the part about never paying back the loan can't be official otherwise it ceases to be a loan and becomes taxable, so you're relying on their goodwill to never ask for the money back, but legally they could do it.
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Originally posted by Bunk View PostThe loan schemes are usually something along these lines:
The money from your contract goes to the company running the scheme. They loan you back the money minus their fee. No tax is payable on a loan. The loan is never called in. The dodgy part is that the part about never paying back the loan can't be official otherwise it ceases to be a loan and becomes taxable, so you're relying on their goodwill to never ask for the money back, but legally they could do it.
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The loan schemes are usually something along these lines:
The money from your contract goes to the company running the scheme. They loan you back the money minus their fee. No tax is payable on a loan. The loan is never called in. The dodgy part is that the part about never paying back the loan can't be official otherwise it ceases to be a loan and becomes taxable, so you're relying on their goodwill to never ask for the money back, but legally they could do it.
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Originally posted by posterboy View PostExcuse my ignorance, can someone please explain the scheme?
I thought this was all outlawed
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Tax Avoidance in The Times
The Times has a front page article covering tax avoidance schemes based in Jersey.
I cannot link The Times site but the Daily Mail is running with the article:
The 1% tax haven: Comedian Jimmy Carr 'has £3.3m in Jersey avoidance scheme' | Mail Online
Jimmy Carr jokes about the government cuts yet is paying hardly any tax!Tags: None
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