Offshore Tax Schemes Again
We publish regularly comments in forums, particularly on
ContractorUK and
Freelance Supermarket where Professional Contractors and Freelancers are aksing advice as to whether they should use an offshore tax scheme.
Contractors normally point out the attraction of "no IR35 worries" or even "85% return", and also all the "guarrantees" offerred by the various scheme providers.
On the whole we reply with the same advice:-
1. Whether the scheme works or not , the scheme provider will always take a fee.
2. If the scheme does not work, its your tax bill, and its you left dealing with the tax man.
3. In an HMRC investigation into the scheme, "the provider said" is no defence.
4. A Scheme Provider will always tell you not to worry and it they have taken good advice.
5. It is always your personal responsibility to pay all taxes and declare all income correctly.
So we always conclude - why run the risk of using one of these schemes ?
Accountants can also fall into the trap of promoting these schemes, recently there were several promoting a generally available scheme on the Contractor UK forums, but they went quickly quiet.
This week Mark Lee from Tax Advice Network wrote a great piece on this very subject. Mark illustrates exactly what can happen to accountants who promote such scehemes, and the impact this has on their clients.
If you are ever tempted by the "85% no worries" story , or have colleagues who tell you how great it is to be in one of these schemes, perhaps use this article as a good reminder why its much safe to steer clear.