Offshore Umbrella Co

[geoff from contracta IOM]

Oh right, so what your saying is that the industry literature (that you provided the link to) is incorrect and that the average man (or woman) on the street is too stupid to understand tax mitigation

No i'm saying don't get yourself too carried away with setting up a trust, transferring all your assets into it and thinking you will never pay tax again. The literature is not incorrect just simplistic and as I have stated many many many many times there is not a one cap fits all answer to every question that arises.
I leave that approach to the brollies, we put a bit more thought into it hence why we get paid more and our clients pay less

[LisaContractorUmbrella]

No i'm saying don't get yourself too carried away with setting up a trust, transferring all your assets into it and thinking you will never pay tax again. The literature is not incorrect just simplistic and as I have stated many many many many times there is not a one cap fits all answer to every question that arises.
I leave that approach to the brollies, we put a bit more thought into it hence why we get paid more and our clients take all the risks

[Imperial Knight]

I appreciate that Umbrella companies are unquestionably legal in conception from HMRC's point of view, but why havent the government insited on licencing them to ensure that the hand holding of contractors monies is a regulated activity. That would then do away with all these shady "retain 85%/90% of your income" schemes.
Lisa my question to you is, do you think it should be a regulated activity? Geoff, no need to answer that one cos there aint a hope in hell that your scheme would fit the bill...... Or would it?

[malvolio]

I appreciate that Umbrella companies are unquestionably legal in conception from HMRC's point of view, but why havent the government insited on licencing them to ensure that the hand holding of contractors monies is a regulated activity. That would then do away with all these shady "retain 85%/90% of your income" schemes.
Lisa my question to you is, do you think it should be a regulated activity? Geoff, no need to answer that one cos there aint a hope in hell that your scheme would fit the bill...... Or would it?

To be fair all such schemes have to registered with HMRC. Also the umbrella business is regulated. the difference is that the offshore schemes are not quite the same as a UK-based payroll accounting service; the various hoops they jump through to get their tax-limited status changes the rules. Hence the step change in risk between a UK umbrella and an established non-UK one. Then there's the cowboys...

The point at the end of the day is that the UK practices a self-assesment taxation regime. You are liable for all the taxes you pay (or don't pay), nobody else. How you convert your gross income - employer or freelance, it matters not - into correctly assessed net pay is your problem. And you go to court (and even jail) if you get it wrong. There is plenty of qualified information out there about what tax you should pay and plenty of examples of the net rate due under various circumstances. The boundary is around the 80% mark - much over that and something is being bent, possibly out of shape.

[LisaContractorUmbrella]

I appreciate that Umbrella companies are unquestionably legal in conception from HMRC's point of view, but why havent the government insited on licencing them to ensure that the hand holding of contractors monies is a regulated activity. That would then do away with all these shady "retain 85%/90% of your income" schemes.
Lisa my question to you is, do you think it should be a regulated activity? Geoff, no need to answer that one cos there aint a hope in hell that your scheme would fit the bill...... Or would it?

"Regulated" for me assumes State interference and more red tape which none of us wants but I do think that HMR&C should make their position clear and legislate in such a way as to make 'loopholes' impossible. At the moment much of the legislation that surrounds our industry is woolly and ambiguous and open to abuse but then there is also the opportunity for HMR&C to generate more revenue in the form of penalties and interest so I am not convinced that they believe it is in their own interests to make the tax system clearer

[Vallah]

Lisa my question to you is, do you think it should be a regulated activity? Geoff, no need to answer that one cos there aint a hope in hell that your scheme would fit the bill...... Or would it?

Judging from some of the other threads in this section, I'd say a lot of offshore schemes are a lot more upfront and honest than certain "traditional" umbrella firms.

[LisaContractorUmbrella]

Judging from some of the other threads in this section, I'd say a lot of offshore schemes are a lot more upfront and honest than certain "traditional" umbrella firms.

Let's quantify that - some offshore schemes are more upfront and honest than some traditional umbrella companies

[ds2000]

As someone that very nearly went offshore before reading a lot I personally shall not touch such a scheme with a barge pole. The savings, first year especially, for newbies to contracting are negligible *

*e.g. being able to reclaim some purchases prior to startup of hardware for 2 years, bills, mileage for 6 months etc

I did a lot of reading about BN66 and Montpelier and decided the risks are just not worth it. HMRC could impose any legislation tackling the loans at any point (once they actually do something proactive) and if they made it retrospective a lot of people would be up the creek.

With smart planning I think I'm probably getting around 80% of what I want/need, the rest I can invest and safe guard my, my partners and my companies futures and more importantly the actual funds are in my companies hands and not that of a faceless offshore umbrella!

The very idea on being loaned and interest charged on money I've worked for is absurd and morally wrong, "yes you do have to repay the loan but not really " . Not to get high and mighty but you live in this country you pay the taxes!

[LisaContractorUmbrella]

As someone that very nearly went offshore before reading a lot I personally shall not touch such a scheme with a barge pole. The savings, first year especially, for newbies to contracting are negligible *

*e.g. being able to reclaim some purchases prior to startup of hardware for 2 years, bills, mileage for 6 months etc

I did a lot of reading about BN66 and Montpelier and decided the risks are just not worth it. HMRC could impose any legislation tackling the loans at any point (once they actually do something proactive) and if they made it retrospective a lot of people would be up the creek.

With smart planning I think I'm probably getting around 80% of what I want/need, the rest I can invest and safe guard my, my partners and my companies futures and more importantly the actual funds are in my companies hands and not that of a faceless offshore umbrella!

The very idea on being loaned and interest charged on money I've worked for is absurd and morally wrong, "yes you do have to repay the loan but not really " . Not to get high and mighty but you live in this country you pay the taxes!

What sort of smart planning? 80% is a pretty good return

[prozak]

To the OP.

Don't sell out for less than 90% in the hand. The extra 5% isn't going to insurance or anything else it is pure profit for the umbrella.

Geoff / Vallah -
what is the wage/salary component of your scheme?
How much is your cut?
How much tax is actually being paid so your customers can work out their liability should it all go tits up and HMRC rule the whole lot as PAYE income.

Thanks.